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Archive for the ‘Ireland’s sovereign bond rating’ Category

More Billions to go down the Irish banks black holes

A report from Goodbody Stockbrokers has argued that the State cannot bear the losses from the banking crisis on its own.

In a report on Irish debt levels, Goodbody says there should be some form of risk-sharing with bondholders. But it adds that Ireland cannot do this on its own, and should push for a Europe-wide solution to the problem.

Goodbody says some €21 billion of bank debt should be restructured now – otherwise there will have to be a restructuring of Irish sovereign debt some time after 2014. Goodbody economist Dermot O’Leary says a new government must act urgently, as two-thirds of these bondholders are due to be repaid over the next 24 months.

Goodbody estimates the savings to the taxpayer could be around €10 billion if a 50% haircut were applied to the outstanding stock of unsecured, unguaranteed senior and subordinate bondholders.

The stockbroker believes Ireland will not reach the target of a 3% of GDP budget deficit by 2014, as foreseen under the four-year plan. Instead it believes the deficit will still be 4.3%, and the debt/GDP ratio will reach 115%.

The report also warns that reducing Ireland’s debt to levels required by the EU Stability & Growth Pact could take 20 years of tight budgets, even if the targets set out for the next four years are met.

Goodbody says the costs of the banking crisis make it less likely that Ireland will be able to pay back its debts in the future. It has raised its estimate of the cost of the banking crisis to €57.5 billion or 36% of gross domestic product.

‘The new Government has a small window of opportunity to convince the EU that it is in everyone’s interest to implement a more comprehensive reform of the banking system, which recognises that the Irish sovereign can no longer support the burden alone,’ said economist Dermot O’Leary.

Other options suggested by Goodbody are allowing the European Financial Stability Facility to directly recapitalise weak banking systems such as Ireland’s or facilitate the sale of Irish banking assets through an EU-wide insurance scheme.

The Goodbody report also says a reduction in the interest rates charged under the EU/IMF bail-out is needed. It calculates that every one-point reduction saves €675m a year in interest payments.

Ireland will need more EU help to raise funds – NCB

Stockbroker NCB has said that Ireland will need further EU help after 2013 to raise funds. It says a lowering of the interest rate on EU loans would give Ireland a higher probability of weaning itself off aid by 2014.

The ‘Ireland Moves Forward’ report also identifies state assets that could be the first to be sold off to help the Government finances, including those in the areas of forestry, energy, networks and ports.

The report says Ireland can look forward to a two-tier jobless recovery in 2011 with exports continuing to grow but domestic demand remaining weak. It says that the country’s competitiveness has improved significantly through the economic downturn.

It also points out that foreign direct investment in Ireland increased significantly last year, despite the global pot declining by 8%.

NCB says the country will be rolled into the European Stability Mechanism (ESM), the permanent EU crisis mechanism to replace the current European Financial Stability Fund.

It says a lowering of the interest rate on EU loans would give Ireland a higher probability of weaning itself off aid by 2014.

But it argues that any post-general election attempt renegotiation of the terms of the EU/IMF financial support for Ireland would lead to a deal that looks ‘very similar’ to the existing one.

It says the only changes would be in the exact details of how the €15 billion in budgetary corrections in coming years are achieved. However, NCB does see changes to the interest rate taken at a European level as likely in the coming months.

Today’s report says the Irish banks remain reliant on the state for capital and on the ECB and Irish Central Bank for liquidity. It adds that the March stress tests will determine whether any additional capital is needed apart from the €10 billion already earmarked for the financial institutions.

NCB predicts that the National Asset Management Agency will be a major ‘dictator of activity in 2011’ and beyond.

NCB says the VHI, Coillte, Rosslare Port as well as energy sector assets like Bord Gáis and the ESB with generation and supply assets should be sold off ahead of network assets such as distribution and transmission.

Today’s report also says there are further falls in house prices with a further 10% fall from peak levels expected.

NCB says that the Irish equity market is no longer a reflection of the Irish economy. The report notes that Irish derived profits now represent 17% of overall profit in its sample of recommended Irish shares. That compares to 36% in 2006.

It says publicly quoted food and construction companies are likely to be active acquirers of other businesses this year, while the area of renewable energy/cleantech industries continue to be an area of significant investor interest.

source:http://www.rte.ie/news/2011/0208/economy-business.html

Comment:

As Max has been saying we are still not been told the real figures and we continue to get a drip drip feed on this financial disaster .Now Dukes comes out and tells us that we must pump 15 billion more into these toxic black holes that is now All of the Irish Banks

The two main contenders for the top jobs in the new Government are choosing to ignore the real problem that is because they are themselves not in a position to understand the debt of this financial meltdown

The Banks must be allowed to fold and a new commercial bank that has new capital be brought into existence. The new 15,000,000,000: and not forgetting the new 1,500,000,000 for Bank of Ireland  billion  could be better spent in a new jobs stimulus packet and new Bank credit for small business

For God sake anybody with a atom of sense should know this !

See the Republic of Ireland’s national debt mount up, a measure of the legacy the Irish Government is in the process of bequeathing to the children of Ireland:

€ 95,314,656,426

The FINANCE DUBLIN Irish Government Debt Clock was set at midnight on June 30th 2009, when it was €65.278 billion It updates the latest figures for the National Debt of Ireland. The clock is re-set periodically, to reflect changes in debt and deficit estimates from the Dept of Finance, the National Treasury Management Agency (NTMA), and independent economists.

Hangover for Irish Banks

Central Bank of Ireland located on Dame Street...

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MONDAY’S jump in banking stocks was followed by a hangover yesterday as the country’s lenders pared most of the gains posted in the session.

Bank of Ireland fell 4pc to 69c after Standard & Poor’s (S&P) cut its outlook to “negative” from “stable” and warned that the lender faces “considerable challenges” restoring its credit profile as the Irish economy recovers slowly.

“Our view is that the Irish economy is likely to recover only quite slowly, with household finances remaining stretched, asset prices unlikely to start appreciating materially for a couple of years and credit demand remaining muted for many years,” S&P said in a gloomy forecast.

Allied Irish Banks, fresh from celebrating the sale of its stake in Bank Zachodni, tumbled 4.6pc to 75c as ING Group said the bank “is not out of the woods yet”, following the sale and is still “likely” to end up in majority state ownership.

Another stock feeling groggy yesterday was Norkom which tumbled 15.8pc to 80c, extending the previous session’s 24 decline following a profit warning.

CRH was another loser, slipping 1.9pc to €13.20 after the building materials company was downgraded to “neutral” from “outperform” at Credit Suisse by equity analyst Harry Goad. His target price is €14 per share.

The ISEQ ended the session down 20.44 points, or 0.7pc, to 2795.04 points. Elsewhere in Europe, stocks were little changed with the Stoxx Europe 600 Index close to a four-month high, as better-than-estimated US retail sales offset a selloff in utilities and a slump in German investor confidence.

Stocks initially rallied after a government report showed sales at US retailers climbed in August for a second consecutive month. Separate figures from the ZEW Centre for European Economic Research showed German investor confidence fell more than economists forecast to a 19-month low in September.

In the UK inflation unexpectedly exceeded the government’s 3pc limit for a sixth month in August; while a UK housing-market gauge fell more than economists expected in August to the lowest since May 2009, according to the Royal Institution of Chartered Surveyors.

Electricity companies RWE and E.ON dropped after brokers downgraded Germany’s largest utilities. Philips lost 3.9pc after the world’s biggest lighting company set new financial targets for the next five years. Gamesa Corporacion Tecnologica paced advancing shares amid takeover speculation.

ARM Holdings retreated 4pc after the company said a number of executives sold shares in the UK designer of semiconductors that power Apple’s iPhone.

Ladbrokes dropped 1.2pc after Goldman Sachs downgraded its recommendation on the bookie to “sell” from “neutral.”

– Thomas Molloy

Irish Independent

 

Comment:

This comes as no surprise to me as I have pointed out in previous posts the two main banks are from any normal booking keeping standards, they are both bankrupt

They are engaged in hiding enormous losses behind dioubious financial instruments called derivates as they are not going to disclose these losses

I believe they are trying to drip feed the markets over the next 3-5 years if they can get the time from the government or they will try to pass them off to NAMA

There is some credence to this method as NAMA is the ideal vehicle to do so through the Toxic toilet that is Anglo Irish Bank

Stay away from Irish  bank shares as I expect the State will eventually end up owing a majority holding of Allied Irish Bank and possibly a 49% stake holding of Bank of Ireland at best!

Cowen & Lenihan spin doesn’t wash with the markets

SAN FRANCISCO (MarketWatch)

Standard & Poor’s Ratings Services downgraded Ireland’s credit rating Tuesday on concern about the cost of bailing out the country’s ailing banks.
S&P lowered Ireland’s long-term sovereign credit rating to AA- from AA and kept its outlook on negative, suggesting the ratings agency could cut again.
The downgrade applies to other ratings that depend on Ireland’s sovereign credit rating, including senior unsecured debt ratings on government-guaranteed securities of Irish banks, S&P noted.
The Irish economy, like many around the globe, is struggling, but well-to-do visitors are returning to the Emerald Isle to take advantage of more attractive pricing for lodging and a chance to enjoy its storied golf links.
“The government’s support of the banking sector represents a substantial and increasing fiscal burden, which in our view will be slow to unwind,” Standard & Poor’s credit analyst Trevor Cullinan said.
The euro /quotes/comstock/21o!x:seurusd (EURUSD 1.2633, +0.0006, +0.0475%) recently traded at $1.2624. That’s lower than it was earlier Tuesday and down from $1.2684 late Monday.
Like several developed countries, Ireland bailed out some of its largest banks in the wake of the 2008 financial crisis. Anglo Irish Bank was nationalized.
The government recently got European Commission approval to inject another 10 billion euros into Anglo Irish Bank, on top of the 14.3 billion euros it already provided. That’s sparked concern Ireland may have to spend more on new support for other banks.
While such bailouts may have averted a much harsher global recession, they have left several developed countries burdened with more debt. Read about the sovereign debt crisis.
90 billion euros
The total cost of Ireland’s support for its banking sector may now reach 90 billion euros ($114 billion), or 58% of GDP, S&P estimated. That’s up from a previous forecast of 80 billion euros.

Comment:

The government’s lies to the markets is not working as we see by the latest Standard & Poor’s Ratings downgraded of Ireland’s credit rating this evening
Anyone that now still believes a single word out of Cowens or Lenihans mouths is guilty of plane stupidity
Surely the people who are backing these two clowns must now begin to question the sanity of their undying support for their pals in Anglo Irish Bank and the NAMA fraud that was set up to bail out the golden circle
These clowns must be stop before we are all totally ruined and condemned to go back to the depression of the 70,s or even the 50,s

Unelected Taoiseach Cowen

Unelected Taoiseach Cowen  

 has criticised what he called the pervasive negativity in the media about the Irish economy.

Commenting on the downgrading of the economy by Moody’s, Brian Cowen said the National Treasury Management Agency had made clear we are a very stable economy.

The international ratings agency, that helps investors assess investment risk, downgraded Ireland for a second time since the financial crisis began.

However, the agency has moderated its outlook for Ireland from negative to stable.

Moody’s downgraded Ireland’s sovereign bond rating to Aa2 from Aa1.

Moody’s Senior Credit Officer and lead analyst for Ireland Dietmar Hornung said the ‘downgrade is primarily driven by the Irish government’s gradual but significant loss of financial strength, as reflected by its deteriorating debt affordability.’

Rival agency Standard & Poor’s, which downgraded for a second time in April, has maintained a negative outlook for the country.

The NTMA, which manages the national debt, has said the downgrading of Ireland’s credit should not have an impact on the country’s debt.

The agency, which is having its monthly auction of Irish bonds tomorrow, said the rating decision was not based on any new information.

The NTMA’s Oliver Whelan said there were positive elements in the Moodys’ announcement.

Comment:

Mr.Cowen the National Treasury Management Agency’s assurances are worth nothing to the Irish public in light of the assurances from your predecessor Ahern on Irish house prices two years ago or the assurances the financial regulator gave on Anglo Irish Bank or on your own assurance on the cost of bailing out the big banks of this state

You have absolutely no credibility; neither does any state body that includes the central bank  

You have lied to the Irish people and brought us down on our knees to the altar of the foreign vultures

Thus ensuring that future generations will continue to be slaves in their own country

You and your cabinet swatters will have to face the people’s justice sooner or later
We need action on jobs and a general election now

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