Bond investors welcomed Ireland's multibillion euro banking bailout, as they prefer transparency over the uncertainty that further skeletons may remain in the closet.
The worst-case scenario of a €35bn bill to shore up Anglo Irish bank was mostly in line with forecasts by Standard & Poor's, already priced in by the market.
"The announcement has brought clarity and the central bank's worst-case scenario looks credible," said Brian Barry, a credit analyst at Evolution Securities. "They have kitchen-sinked - they have finally dealt with the issues around the financial sector and the market looks to be taking some confidence from this."
The lack of nasty surprises pushed up the price of Irish bonds, sending the 10-year bond yield down by 10 basis points to 6.5%.
Such borrowing costs are still almost unbearable, and similar to those of Greece just before it succumbed to the €110bn bailout by the European Union and the International Monetary Fund in the spring. The difference is that Greece, then, had multibillion euro immediate debt commitments, while Ireland is already funded for the rest of the year.
The Irish government said that it suspended bond auctions for the rest of the year, and that it planned to return to the international markets in 2011.
The bailout of Ireland's banking system will push the government's budget deficit to a staggering 32% of GDP Ireland said today. The government reiterated its commitment to cut the deficit below 3% of GDP by 2014.
