At last check Irish-Bund spreads were north of 725 bps, meaning Ireland is now effectively insolvent, and joins Greece in the group of bankrupt European countries. If this blow out is not stopped immediately, the contagion will again spread to the periphery first and then to the core shortly thereafter. The only question is when, just like in the case of oh so coy Greece, will Lenihan admit defeat and ask the IMF and the ECB for help (oh, and do it so during a Citigroup-mediated conference call). However, as Market News reports, citing Handesblatt, the Irish rescue may be imminent, and may come as soon as today.
From Market News:
Eurozone governments are preparing for a possible Greece-style rescue for Ireland although the country has not yet asked for financial assistance, German daily Handelsblatt reported Thursday, citing German government sources.
"The rise in Irish yields are a cause for concern" which is why Eurozone states are now examining whether Ireland needs liquidity support from the European stability facility, the paper said.
While Ireland had not asked for help as yet, euro area governments are preparing for the emergency contingency. "We are ready to help Ireland on very short notice," one of the sources told Handelsblatt.
Irish central bank Governor Patrick Honohan warned Wednesday that Ireland's current sovereign borrowing costs are unsustainable. "I'll readily say that the current rate is well above the rate at which one would go back in [to the markets]. It is "unsustainable and you couldn't imagine them going forward," Honohan said.
The Irish government thus far has assured that it will be able to emerge from the current crisis without drawing on help from its euro area partners.
Earlier Thursday, Irish 10-year bond spreads widened to a fresh all-time EMU high at +640 bps above the benchmark German Bund.
How about at 720 bps 4 hours later? If the rate of collapse persists, Irish debt will be trading at levels that make Burkina Faso giggle.