The crisis continues for the embattled Emerald Isle. Today Ireland's 5 year CDS hit 605 bps, before closing at 597 bps--a new record high. We have long speculated that Ireland faces imminent bankruptcy; the only question is when? The Irish government has so far refused to comment about appealing to the EU for a bailout. However, time is running out as 10-year bond yields hover around 7.9% as investors scramble for cover. The rumor is that Ireland can make it through the first few months of 2011 without tapping the bond market, but I think a collapse of the bond market should precipitate the official EU bailout much sooner. In the meantime, the ECB has announced it is buying Irish debt to calm fears of contagion within Europe's periphery. So far, it is not having much of an effect as bond yields continue to surge. At best, it is a stop-gap measure until the details of a bailout are finalized. For investors a more germane question is: Which country is next-- Portugal, Spain, or Belgium?
Irish Crisis Nears Endgame--5 Year CDS Surges To 495 bps