Irish Bonds Catch Brexit Britain's Cold as May's Future in Doubt
Irish bonds are sharing the pain of U.K. Prime Minister Theresa May as her future and Brexit plan are thrown into doubt.
The nation’s securities underperformed all their euro-area peers Wednesday amid the political turmoil in its biggest trading partner. The correlation between Irish bond yields and pessimism in the pound, reflected through currency options, is getting stronger as Brexit fears grow, according to Mizuho International Plc.
“The pain in Irish bonds is called Brexit,” said Antoine Bouvet, a rates strategist at Mizuho.
Irish five-year bond yields climbed three basis points to zero percent as of 10:40 a.m. in London, taking their spread over German peers to 28 basis points, the highest level since May. That comes as Ireland’s debt office is due to announce its 2019 funding plans soon.
May faces a no confidence vote Wednesday evening, with many of her Conservative Party lawmakers unhappy about the proposed solution to avoid a hard border between Northern Ireland and Ireland. If Britain crashes out of the EU without a deal in March, it could almost halve the growth outlook for Ireland in 2019, according to the Economic & Social Research Institute.
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