The Irish Independent reports that US bank Citigroup is predicting that Irish bond prices will slide further, even though the company is one of the National Treasury Management Agency's primary dealers in government bonds.

The NTMA maintains a list of 15 primary dealers that buy Irish government bonds and then resell them on to the market. Citigroup is one of the 15 and it is also a member of the Irish Stock Exchange. It maintains a so-called 'Chinese wall' between its primary dealer bond desk and its team of fixed-income analysts. It is this team that has published some of the most bearish forecasts on Irish bonds in the past week.

The bank said last week that the gap or 'spread' between Irish and German bonds was set to widen further as markets grew jittery over the amount of debt the Irish banks have to roll over.  Citigroup estimates Irish banks have about €13bn of debt to roll over in September, with about half of that expiring in just a two-day period.

Sentiment

"Any difficulties that the banks have in rolling over debt will add to the Government's woes and could further damage market sentiment," said Robert Crossley, a fixed-income strategist at Citigroup in London.

"We are not confident that this is the turning point for Irish spreads," Crossley said.

"The momentum is for further widening. Spreads will only re-tighten once buyers outweigh sellers. Short term, that seems unlikely."

Yesterday, Irish bond yields remained elevated, but some pressure eased on 10-year money, with yields dropping 12 basis points to 5.5pc.

Yields on shorter-term money were the second-highest in the eurozone after Greece.

Yields on six-year money were at 4.5pc, compared with Portugal on 3.9pc for five-year bonds.

Irish banks have significant debt roll-overs to deal with in September, with Anglo, the most fragile of the banks, due to roll over €7bn.

All the Irish banks may need to avail of funding from the European Central Bank to get them through this period.

The ECB earlier this year loosened its rules on the kind of collateral it would accept.

The Irish Independent also reports that the international success of Jameson has prompted Irish Distillers to embark on a major expansion project for its warehousing facilities outside Midleton, Co Cork.

The Irish Independent understands that the company, which is owned by French drinks giant Pernod Ricard, has begun a consultation process with locals with a view to beginning construction of the new facilities in the near future.

It's also believed that Irish Distillers is buying land from State-owned forestry group Coillte for the development and that a purchase agreement has already been signed.

A spokesman for Irish Distillers confirmed yesterday that the expansion was poised to take place, adding that the current warehouse facilities in Midleton were approaching full capacity. "In anticipation of the need for further warehousing capacity to mature increasing stocks of Jameson needed to fulfil global demand, Irish Distillers has actively looked at a number of sites that might be suitable for such a development," he said.

Substantial

The company, which is headed by Alex Ricard, said a site at Dungourney, Co Cork, has been identified and that, subject to the normal planning process, it will be developed to create the additional warehousing capacity required to meet the demand for Jameson over the coming decades. The spokesman declined to say how much the development might cost, but it is believed it will be reasonably substantial.

Coincidentally, Irish Distillers sells an exclusive bottle of whiskey called Dungourney at €500 a pop.

Pernod Ricard, which acquired Irish Distillers in 1988, has been marketing Jameson around the world as one of its 15 global strategic brands. The group, which reports full-year results this Thursday, said in April that volume sales of Jameson had declined in Ireland during the third quarter of its current financial year but were up 8pc in total.

The company sold about 2.7 million cases of Jameson in the 12 months to the end of June 2009, more than other Pernod Ricard brands including Beefeater and Martell. It's believed Pernod Ricard has plans to raise annual Jameson sales to three million cases.

The Irish Times reports that the High Court is to send a letter asking its counterpart in Northern Ireland for recognition of the court protection granted to Aer Arann last week.

The purpose of the letter is to ensure that none of Aer Arann’s aircraft is seized by anyone owed money while the airline is in examinership.

An interim examiner was appointed late last Thursday to the airline, which employs more than 300 people, by Ms Justice Maureen Clark at the High Court.

The court heard that Aer Arann, which had lost millions of euros in recent years, was seeking to be placed into examinership in order to reorganise its affairs. The court also heard that the airline had a reasonable prospect of survival if certain steps were taken.

At the High Court yesterday, Mr Justice Peter Charleton agreed to send a letter to the High Court in Northern Ireland seeking recognition of the examinership process in this jurisdiction.

The judge was informed that the company was making the request for judicial assistance amid concerns over Aer Arann’s aircraft that operate flights to and from City of Derry and Belfast airports.

Mr Justice Charleton said he had no hesitation in agreeing to something that “would assist in the administration of the examinership of Aer Arann”.

Declan Murphy for Comhfhorbairt Gaillimh, the company which operates Aer Arann, said Ms Justice Clark had agreed to the company’s request to send similar letters requesting judicial assistance to the courts in other jurisdictions that Aer Arann operates out of including Scotland, England and the Isle of Man.

Mr Murphy said it had subsequently had been deemed necessary to make a similar request for recognition of the examinership process to the Northern Ireland High Court. This step was aimed at preventing creditors from seizing any of the airline’s aircraft while in that jurisdiction.

Last week Ms Justice Clark appointed accountant Michael McAteer of Grant Thornton Chartered Accountants as interim examiner to the airline after being informed that an independent accountant’s report revealed that Aer Arann had a reasonable prospect of survival as a going concern.

The airline, in seeking the protection of the court from its creditors, cited the drop in passenger numbers caused by the global economic downturn as well as the disruption caused to flights by the Icelandic volcano earlier this year as the main reasons behind its financial difficulties.

The court heard that the airline was seeking the protection of the court because it was currently insolvent and could not pay its debts. However the court was also informed that a number of prospective investors had entered into talks with the airline.

The matter is due back before the High Court next week.

The Irish Times also reports that State-owned Anglo Irish Bank is expected today to report a loss for the first half of this year well in excess of the previous six-month deficit of €4.1 billion posted last year.

This would lead to Anglo setting a new Irish corporate record for a loss in a six-month period.

The bank will report the losses incurred on the transfer of the first €9.25 billion in loans sold to the National Asset Management Agency, and further losses on non-Nama loans and investments.

The loans were sold at a discount of 55 per cent, forcing the bank to take a loss of €5.1 billion.

The bank, which is led by chief executive Mike Aynsley, may also take into the six-month accounts some of the €4.2 billion in losses incurred on the second tranche of €6.75 billion in loans sold to Nama earlier this month at a discount of 62 per cent. Anglo has a further €19 billion in loans to sell to Nama.

Anglo is also expected to post losses on financial derivatives and investments today, and may need to refer to the loans due by businessman Seán Quinn and his family, totalling about €2.8 billion.

Mr Quinn has questioned whether the family would be able to repay the loans if Quinn Insurance, which is in administration and currently up for sale, was sold out of his business, Quinn Group.

Anglo has expressed an interest in taking control of Quinn Insurance with an industry buyer in an attempt to secure the repayment of the loans. The bank is one of several parties interested in buying the beleaguered insurance firm.

The bank last reported results in March when it announced a loss of €12.7 billion – the highest in Irish corporate history – for the 15-month period to the end of last year after writing off €15.1 billion on bad loans and investments, primarily due to the property crash.

Anglo previously announced a loss of €4.1 billion for the six months to the end of March 2009.

Some €10.1 billion of the impairments taken during the 15 months to December 2009 related to a 28 per cent write-down on the €36 billion in loans – half the bank’s original loan book – moving to Nama.

Anglo has so far received €14.3 billion in capital from the Government in cash and by way of promissory notes. The European Commission has approved a further €10 billion, and Central Bank governor Patrick Honohan has said the Anglo bailout will not exceed €25 billion.

Ratings agency Standard & Poor’s estimated last week that the cost of Anglo to the State could rise to €35 billion over time.

The total cost of recapitalising the banks may total €39.9 billion, including the €7 billion injected into Allied Irish Banks and Bank of Ireland, fixed income firm Glas Securities said in a research note.

Anglo wants to split the post-Nama €36 billion loan book into a good bank and bad bank, with a view to selling the good bank and running down the bad bank over time. The plan is awaiting European Commission approval.

Green Party finance spokesman Dan Boyle said Anglo could be wound down more quickly, after four to five years, and that the preferred option of a split was proving more costly than first thought.

A Department of Finance spokesman said the Government’s preference was for the option that posed the lowest cost to the State.

The Irish Examiner reports that the Government’s take from the controversial air travel tax has fallen 20% on last summer’s figures.

This news comes as Ryanair threatens to pull more flights from Shannon Airport if costs are not reduced.

Figures supplied by Revenue also show it collected €1 million less in July than on the same month last year from the travel tax.

In the summer months of May, June and July the Government collected €26.4m on the tax compared with €33m in summer 2009.

Figures show €10.9m was collected in July, €9m in June and €6.5m in May.

The Government announced the introduction of the travel tax in 2008 and stated at the time that it expected to raise €150m in a full year. It later revised that downward to €125m.

However, in the first six months of this year, the take is almost €45m. Last year’s take was €84.4m for eight months as the tax came into force in May 2009.

Ryanair has constantly demanded that the Government abolish the departure tax saying that if it did the airline would add more routes in Ireland.

Bloxham stockbrokers’ analyst, Joe Gill, estimates the tax could cost the economy around €450m a year as many tourists will stop coming to Ireland.

The tax means every person leaving Ireland travelling over a certain distance has to pay an extra €10 per flight.

Latest figures from the Irish Aviation Authority shows there were 7,800 commercial flights at Shannon in the first six months of the year, 6,480 fewer than the same period last year, representing a 45% drop.

In the same period, Cork fell by almost 12%, and Dublin by 15%.

Meanwhile, Ryanair said it was an "insane decision" by Shannon Airport to increase passenger charges by 33% from €9.50 per passenger to €12.65 from November 1. Chief executive Michael O’Leary said: "This is yet another Government sponsored attack on Ireland’s declining tourism industry and will cause further devastation to traffic and tourism numbers in Shannon and the mid-west region."

Ryanair called on the Department of Transport to order the DAA reverse these price hikes, "before further damage is done to Shannon Airport traffic, tourism and jobs this winter".

The airline said that if these price increases are not reversed then it will shortly announce further flight and traffic cuts at Shannon.

"The Government’s €10 tourist tax has also made Shannon Airport totally uncompetitive as a gateway to the west of Ireland.

"We call again on the Government to break up the DAA monopoly and scrap the €10 tourist tax."

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