Margin call on Irish bonds up

first_img whatsapp EUROPEAN clearing house Clearnet yesterday pushed up its margin requirement for trading Irish sovereign bonds, raising it from 30 per cent above the normal requirement to 45 per cent above the norm. Clearnet, which handles €11 trillion’s worth of bond trading a month, said its analysts had made the decision after the spread between Irish bond yields and a basket of triple-A rated European bond yields moved above a threshold of 450 basis points.The action means that traders of Irish sovereign bonds must supply Clearnet with collateral equivalent to a value of 45 per cent of their net exposure, far above the normal requirement – which is typically two to five per cent. It indicates that Clearnet thinks the market is pricing in nearly a one-in-two chance of a default.The move is the third such change in two weeks, meaning that the collateral required for trading Irish bonds has been above that of equivalent bonds since 10 November, when the yield on Irish ten-year bonds jumped to 8.6 per cent.Clearnet’s head of fixed income John Burke said: “We can’t afford to be surprised by a fast default. We have to protect ourselves against the possibility.”The spread between Irish and German bond yields is now at an all-time high of 734 basis points.Clearnet’s move comes as Ireland prepares for an important by-election in Donegal, usually a safe seat for the main government party but now at risk of falling to the far-left nationalists Sinn Fein on the back of the bailout chaos. Share KCS-content Show Comments ▼ Tags: NULL Margin call on Irish bonds up whatsapp Read This Next’A Quiet Place Part II’ Sets Pandemic Record in Debut WeekendFamily ProofHiking Gadgets: Amazon Deals Perfect For Your Next AdventureFamily ProofYoga for Beginners: 3 Different Types of Yoga You Should TryFamily ProofBack on the Rails for Summer New York to New Orleans, Savannah and MiamiFamily ProofAmazon roars for MGM’s lion, paying $8.45 billion for studio behind JamesFamily ProofIndian Spiced Vegetable Nuggets: Recipes Worth CookingFamily ProofNew England Patriots’ Cam Newton says no extra motivation from Mac Jones’SportsnautTortilla Mango Cups: Recipes Worth CookingFamily ProofWhat to Know About ‘Loki’ Ahead of Disney+ Premier on June 9Family Proof Thursday 25 November 2010 8:10 pmlast_img

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