Ireland’s government, banks and bondholders were officially bought about 7 1/2 years of time at a price of about 6%. The other bailout child, Greece, didn’t want to be left out and they are being given an extra 4 1/2 years to their three timetable to payback its loans in order to match the Irish maturities. Any hope that the dotting of the I’s and crossing of the T’s for Ireland would calm nerves has been quickly dashed as Spanish and Portuguese yields are spiking with the Spanish 10 yr spread to the German Bund rising 16 bps to a fresh high of 260 bps. Portuguese CDS is now only 65 bps from Ireland. An Irish citizen quoted in today’s WSJ described the situation with this, “I think the government should default on the bonds…We are suffering so the bondholders don’t suffer, it’s capitalism gone mad.” Instead, buying time with more debt continues to be the chosen path and the Euro is at a fresh 2 month low.
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