The bond markets are irrelevant now that the IMF are in the game.
When the IMF offer funds it is as a funder of last resort.
Realistically, no other lender will touch a country so long as an IMF funding programme is in place as the presence of the IMF suggests that the country is financially unstable.
The budget being planned now is the budget which would have been planned even if the IMF was not involved (as we have to deal with a budget deficit of 19 Billion, or 11.5%) and that gap can’t be narrowed by wishful thinking.
I believe that most of these ‘negotiations’ are just political bullshit.
There is a problem. The scope of the problem has to be ascertained. The scale of the funding requirements have to be calculated. All of which if fact finding (and you can’t negotiate the facts)
Which means that the interest rate is all that’s left. But the ESEF lends at 5% (not negotiable – see Germany, again). So this is all a play to ensure that Euro stays stuck together, something I’m increasingly less convinced of.
Any deal, which is done now, will be inevitably renegotiated in the future. The terms don’t matter that much because either so much will change that they’ll be irrelevant, or nothing will change and they’ll be shown to be unviable, where they are unviable, and there will be a controlled debt forgiveness programme (where the Germans will transfer Irish debts onto their books).