While the stock market responded somewhat negatively to the Moody’s downgrade of Ireland to the 1st level of junk, the move is another ‘late to the party’ type move. To compare the credit securities of the newly junk Ireland with US high yield, you can see why. The KDP high yield bond index is yielding 6.79%. In comparison the Irish 2 yr is yielding 17.73% and the 10 yr is yielding 13.35%. The high yield 5 yr CDS index is trading at about 485 bps while Ireland’s 5 yr CDS is at 1000 bps.
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