Friday, June 24, 2011

Yields go past 12% and we’re printing t-shirts

It might only have been for a fleeting moment but the measure of Irish 10-year bond yields as constructed by Bloomberg broke through the 12% barrier this morning.

Bond Yields 1D 24-06-11

It fell below 12% as quickly as it rose above it but at 11.9% the difference is marginal.

What has been the response of the Minister of Finance? “Let’s print some t-shirts.”  This is from a report in today’s Irish Examiner.

"We are thinking of printing t-shirts in the Department of Finance, they won’t be given out free, they will be for sale of course, saying ‘Ireland is not Greece’ ... across the front and back of them," Noonan said.


  1. Seamus.
    I wonder why this is? I have a suspicion that that Irish people incl funds etc are beginning to realise that large European banks and sovereigns may not be as safe as they thought they were. Given that the ECB is hell bent on proctecting the bondholders in every last living and dead bank throughout the EZ and in every shaky country throughout the EZ would incline a reasonable person to think that all is not well with Europe. And one might be better off investing in Irish bonds at 12% than buying a pig in a poke full of naked cds.

    Personally I think Irish bonds are great value. I tried to see if I could put my very small pension fund into Irish bonds a few months ago. I was told no!. Can't be done. I had figured that with a 25% default day one they would pay better that no default German bonds over a six year period.
    Still I was told by two Irish large pension funds (Irish Life and New Ireland) that they have no pension fund exclusive to Irish bonds.
    Better to give the money to the Germans! or whoever.

  2. Hi Joseph,

    Interesting comments. The rules about pension funds are restrictive. The are obligated NOT to have a pension fund exclusive to Irish bonds.

    If we could put the resources in our pension funds to domestic use we could buy up Irish bonds in the secondary market. As you say even at a default of 25% there would still be a profit!

    It also means that if/when we do return to markets we will be dependent on international investors which is unusual given that we have a household savings rate that is north of 10% and close to €100 billion already in pension funds.

    Which bond would you like to buy?

    Ireland: Outstanding Bonds"

  3. Seamus

    Oh, I would go for the 10 year at 12% and hope that I am still alive to collect.
    I was not aware of the obligation on pension funds NOT to have an Irish bond fund.
    For a government that has been funding up to 50% of contributions to the funds, the stipulation has a Groucho Marx quality to it.