The best way to trade Brexit delay is just across UK border

Bloomberg

Investors scouting for the best way to trade the Brexit delay should just look across the UK border — at Ireland’s bonds.
The securities are seen as offering the right mix of safety and returns as the deferral of Britain’s exit from the European Union dispels anxiety over the most contentious Brexit issue — that of the Irish border. Ireland’s debt, rated higher than peripheral euro-area markets such as Italy, has outperformed other semi-core markets such as France and Belgium this year.
Morgan Stanley sees Irish bonds extending the gains amid optimism the UK and the EU will avoid
a disruptive Brexit after agreeing last week to delay the departure to October 31. The bank recommends buying Ireland’s 10-year debt and selling similar-tenor Belgian notes, while JPMorgan Chase & Co.
suggests going long five-year Irish securities agai-nst sales of comparable French ones.
Ireland’s buoyant $334-billion economy will add to the allure of its bonds, Morgan Stanley strategists Tony Small and Robert Brown wrote in a note. Dublin-based think-tank ESRI sees the nation’s gross domestic product expanding 3.8 percent this year, compared with the International Monetary Fund’s forecasts for euro-area and UK growth rates of 1.3 percent and 1.2 percent, respectively. The yield premium on Irish 10-year bonds over German bunds has narrowed to 52 basis points from a high of 78 in February.