Irish CDS Continues Upward Momentum--Reaching New Highs

I fell like a broken record, but I keep thinking that the next major problem area will be Ireland. Irish 5 year CDS is surging higher as investors worry about how the country will deal with the recapitalization of Anglo Irish bank. Previously, the government has assured the market that bondholders would not take a hit, but now some government officials have floated the idea that some bondholders will be wiped out. This could cause an important trigger leading to a decline in risk appetite across global capital markets. Yesterday, Irish CDS hit 412 bps, up 7% on a day when the general market was flat to slightly up. Irish CDS is now at new record highs--even surpassing the levels reached during the height of the 2008 financial crisis.

Here is a recent article from bloomberg which describes Ireland's dilemma--Irish Bank Bailout May Cost $52 Billion, Ex-NTMA Head Somers Tells Times.

Black Swan Insights

Related Articles:
Irish CDS Explodes Higher---Is Ireland the Next Greece?


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