Irish bonds face meltdown after doubling of deposit requirements

Ulster-Lad

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Irish sovereign debt trading faces meltdown today after London-based transaction clearing house, LCH Clearnet, doubled its margin requirement on Irish Government bonds to cover perceived increased risks.

It raised its margin deposit requirement by 15pc to 30pc of net positions, citing higher Irish yields over German benchmarks.
BUSINESS WORLD - Irish bonds face meltdown after Clearnet

Irish bonds fell relative to benchmark German bunds as LCH Clearnet Ltd. said its clients must pay a larger deposit to trade the nation’s securities after yields soared.

The drop pushed Irish 10-year yields up for a second day. LCH, the world’s second-biggest fixed-income clearing house, raised the extra margin requirement for Irish bond trading in the repurchase market to 30 percent of net positions. Irish bonds stayed lower after Finance Minister Brian Lenihan said talks with the European Commission, European Central Bank and International Monetary Fund on potential aid for the country’s banks will start tomorrow. German bonds climbed.

“The margin requirement increase isn’t good for Irish bonds, but it makes an aid deal more likely,” said Charles Diebel, head of market strategy at Lloyds TSB Corporate Bank in London. “It seems pretty inevitable that some kind of deal will be done. It’s just a question of how and what the details are.”
Irish Bonds Decline as LCH Raises Margin Requirement Again; Bunds Advance - Bloomberg

The game is over now.
 


Sync

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Do you mind if I alter the thread title to be "Irish bonds face meltdown after Clearnet doubles deposit requirements"?
 

HarshBuzz

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this was already posted on the 'run on Ireland' thread

suggest you delete this to avoid cluttering up the forum
 

Ulster-Lad

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Do you mind if I alter the thread title to be "Irish bonds face meltdown after Clearnet doubles deposit requirements"?
Not at all, alter away!
 

nuj

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Didn't happen, not today anyway. Irish 10 year yield now around 8.13%, as against 8.24% at close yesterday (per Bloomberg), and tighter against Germany on the day by 10 basis points.

Still at levels where the state can't borrow, all the same.
 


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