On the anniversary of taxpayers giving a guarantee to pay out on all the deposits and almost all the bond debt in six Dublin banks, it may surprise many to learn that Irish sovereign interest rates trade at exactly where they were a year ago.


This weekend the annual interest rate taxpayers must pay to borrow new money for 10 years was trading at 4.7%, only a whisker above the 4.66% rate the Irish 10-year bond was trading at this time last year. At first glance, it is as if the economic troubles of the past year did not matter that much to the people who lend us money. This comforting snapshot is somewhat spoiled, however, when you scan the interest rates the group of so-called peripheral EU countries must pay.


At close to 3.8%, Spain and Portugal this weekend were paying out almost 100 basis points, or a full percentage point less, than they did a year ago, while Greece, at an interest rate of about 4.5%, pays out about 50 basis points less. Interest rates for the pace-setter of the European bond markets – Germany – were this weekend also trading almost a full percentage point lower than late September last. An analysis of Irish sovereign interest rates also brings mixed news. The improvement in Irish creditworthiness from the crisis days of mid-March, when 10-year rates jumped to over 6%, has not taken place because of Nama. About two thirds of the drop in interest rates took place before early summer and after German finance minister Peer Steinbrueck and the European Central Bank made clear no eurozone country would be let go to the wall.