LCH Hikes Irish Bond Margins From 55% To 65%

Yesterday 55%, today 65%, tomorrow: all cash, next week: Greek gold only (and evil silver speculators think they had a rough day).

From LCH:

Dear RepoClear Member,

In accordance with the Sovereign Credit Risk Framework and in response to the yield differential of 10 year Irish government debt against a AAA benchmark, LCH.Clearnet Ltd has revised the risk parameters for Irish government bonds cleared through the RepoClear service.  The additional margin required for positions of Irish government bonds will consequently be increased from 55% to 65% for long positions; this amount will be adjusted for the current bond price*.  Short positions will pay a proportionately lower margin.

1. This decision is based solely on publicly available yield spread data and in no way represents a forward looking market view. LCH.Clearnet will continue to monitor yield spreads closely and keep the parameters under close review in accordance with the Sovereign Credit Risk Framework.
2. The additional margin will be reflected in a margin call on Thursday 26 May 2011.
3. For further information please contact either Tom Chapman ( +44 (0)20 7426 6338 or Lianne Arnold ( +44 (0)20 7426 7376

Chris Jones
Executive Director and Head of Risk Management