Cost of borrowing hits record 7.5% as gap with Germany widens

THE yield, or interest rate, demanded by buyers of Irish Government debt continued to rise yesterday — reaching a record level of 7.5% — as concern over Ireland managing to reduce its budget deficit continued to grow.

The spread — or difference — between the yield on long-term 10-year Irish bonds and those of Germany, Europe’s benchmark security, is now at an all-time high; as the yield on German bunds dropped to 2.44%.

Irish bond yields have started their rise of late — pretty much since the Government’s announcement of its revised €15bn four-year budgetary adjustment — and breached 7% in the last week. Along with Ireland; other national borrowing costs — including those of Portugal and Greece — have also hit record highs (and their highest levels since the introduction of the euro) on the back of proposed new permanent debt restructuring rules from the EU, and their implications.