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Irish bond yield dip has a way to go yet

Tuesday, July 22 10:50:37

Irish long-term sovereign bond yields are currently trading at at just under 2.3pc, which is very good news as regards servicing the country's large debt but they could fall a lot further.

That's according to an analysis from Alan McQuaid, an economist with Merrion Stockbrokers.

He said that Ireland's strategy in recent times has been to under-promise and over-deliver on the budgetary targets front, "which has served the country well in terms of lowering its bond yields dramatically".

"All things being equal, we see this trend being maintained in 2014. The benchmark 10-year bond yield has hit record lows this year and is currently at just under 2.3pc, which is very good news as regards servicing the country's large debt. The modest funding target for 2014 coupled with very positive economic data have helped fuel the rally in Irish government bonds to record lows," Mr McQuaid added.

"However, we still think the rally has further to go and continue to believe that Irish government bonds should because of stronger economic growth potential and a more stable political backdrop be trading at a par with Belgian paper all things considered. Belgian 10-year debt currently yields around 70bps less than its Irish equivalent."

For more visit: www.businessworld.ie