The premium Ireland would pay to borrow compared with euro zone benchmark Germany hit its highest level in nearly a year today as investors fretted about the economic impact on Dublin of a potential UK exit from the European Union.
The gap between Irish and German 10-year bond yields widened to 88 basis points in early trade, the highest since July 2015, according to Tradeweb.
Britain holds a referendum on its EU membership on June 23.
For Ireland - the UK's nearest and largest trading partner - a vote to leave could have far-reaching consequences for the economy.
Aside from the economic impact of Brexit, the situation in Northern Ireland, security of energy supplies and freedom of movement for the large numbers of Irish people working in Britain might also fall into doubt.
The gap or spread between Irish and German bond yields, which serve as a measure of their likely borrowing costs, has risen 23 basis points this week alone.
That is more than for any other euro zone country apart from junk-rated Portugal and Greece, which have been shunned as investors take cover in safer assets.
Investors have become so concerned about Brexit that 10-year German yields turned negative yesterday, indicating that investors are prepared to pay for the privilege of lending to the bloc's top-rated sovereign.
Irish banks are preparing for any potential disruption and volatility in financial markets from a Brexit vote, the Deputy Governor of the Central Bank, Sharon Donnery, said earlier this week.
Ratings agencies have also warned that Brexit could lead to downgrades for euro zone economies including Ireland, a potential setback for the bloc's fastest growing economy.
Research by Davy Stockbrokers shows that a 1% decrease in UK economic output has led in the past to a 0.3% drop in Ireland.
"Ireland is the most exposed euro zone country to any economic fallout from a Brexit," Jack Allen, European Economist at Capital Economics also said in a note this week.
