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Bank Downgrades: Moody's Investors Service on Monday cut its ratings
on five Irish banks to junk status following its downgrade of Irish sovereign
debt last week.
The rating agency said the cut reflected the reduction in the level of systemic
support embedded in the deposit ratings following the downgrade of the sovereign
The long-term bank deposit ratings of Allied Irish Banks (AIB), Bank of Ireland
(BoI), EBS Building Society (EBS) and Irish Life & Permanent (IL&P) was lowered
by two notches, while that of ICS Building Society (ICS) was cut by one notch.
Also, the unguaranteed senior unsecured debt ratings of AIB, EBS and IL&P was
downgraded by one notch to Ba3 and that of Bank of Ireland to Ba2.
The outlook on the long-term bank deposit and unguaranteed senior unsecured debt
ratings of these institutions is negative, the agency said.
Last week, Moody's downgraded Ireland's sovereign ratings by two notches,
citing weakening financial position of the government amid subdued economic
activity. The outlook on the ratings remains negative.
The downgrade means some investors will no longer be allowed to buy Irish bank
under the terms of their investment mandate. It will also hit corporate deposits
Bank to offer 10% bonus payments to customers reducing their outstanding
mortgages: Permanent tsb bank said will reward tracker mortgage customers
who make additional payments off their outstanding mortgages by adding a 10%
bonus payment to whatever extra amounts are paid subject to certain terms and
conditions. The offer will be open to customers who make additional payments of
€5000 [or multiples thereof] up till the 17th June next. The bank has set a
ceiling of €500 million on the amount of additional repayments it will receive
under the scheme at which point the initiative will be reviewed.
The initiative is open to all of the bank’s tracker mortgage customers whether
they have Residential, Investment or Commercial mortgages. Customers can avail
of the offer on payments made up to a maximum of 50% of the outstanding balance
on the mortgage. The offer is also available to customers who are currently in
arrears and the bonus payment will apply to any payments made once the arrears
have been cleared.
Customers availing of this offer will continue to enjoy their current tracker
product benefits after any extra payments are made.
Speaking today, David Guinane, chief executive of Permanent tsb bank said; “This
is a significant innovation by the bank which will offer benefits to both
customers and to the bank. It’s in both parties interests to reduce the amount
of outstanding balances on tracker mortgages. We will continue to look for
further innovations in relation to these and other products in the months
India Economic Outlook: Taimur Baig, chief economist, India at Deutsche Bank, expects the Reserve Bank of India to hike 50 basis points on the 3rd of May to combat inflation:
CPI inflation rates rise on oil prices: Davy economist Conall
Mac Coille comments - -"Consumer price inflation data released
on Friday illustrated that both in the US and euro area inflationary
pressures are being driven by energy prices. CPI inflation in both
the US and euro area was 2.7%, slightly stronger than expected. In
the euro area, the core rate was 1.3%, largely driven by a sharp
rise in the clothing component. In the US, CPI inflation excluding
food and energy was 1.2%.
As in 2008, when oil prices rose to close to $160 per barrel, the
current divergence between core and headline rates of CPI inflation
is causing disagreement among central bankers on the appropriate
path for monetary policy. In 2008, the ECB decided to increase its
main policy rate just as the financial crisis began to intensify.
Central banks cut rates sharply as the disinflationary pressure from
the global financial crisis became clear, not least through the
sharp decline in oil prices to €40 per barrel.
In the US, attention will be focused on the first of FOMC
chairman Ben Bernanke's press conferences next week. Bernanke is
expected to indicate that monetary policy will remain on hold
despite comments to the contrary by several regional Federal Reserve
presidents. Over the weekend, two ECB council members indicated that
future rate rises are likely in the euro area. Council member Edwald
Nowotny said that expectations for further increases in rates by 50
basis points in 2011 are well founded, and Belgian Luc Coene
indicated that monetary conditions are too accommodative. These
comments stand in some contrast to those of ECB President Trichet
that last month's 25 basis point rise did not necessarily indicate a
sequence of rate rises.
With oil prices maintaining levels in excess of $120 per barrel,
the upward pressure on headline measures of CPI inflation will be
maintained in the near future. But current levels must in part
reflect a risk premium relating to political unrest in the Middle
East. If current political tensions dissipate, oil prices could fall
sharply – helping to ease disagreements among central bankers and
delaying the tightening of monetary policy."
China Hikes RRR Again: Peter Esho, chief market analyst at City Index thinks that the PBOC hike on Sunday is no surprise but expects more moderate tightening in the next few months:
Economic View: Ireland passes its first test by the Troika; Goodbody
chief economist, Dermot O’Leary, comments -- "Over the past two weeks,
Ireland faced its first examination from authorities in the IMF/EU/ECB in
relation to the programme set out in December. On Friday, it was revealed that
Ireland has passed this first test, with the IMF stating that the 'program is on
track but challenges remain and steadfast policy implementation will be key”.
Given that the main reason for the Troika’s arrival in Ireland was the fragility
of the banking sector, the measures taken to address this area were always going
to be the most important. On this, the IMF is unsurprisingly complimentary of
the measures announced at the time of the stress tests, saying they are a “major
step towards restoring the Irish banking system to health.'
On the public finances, the IMF state that targets thus far have been met
'by a comfortable margin.' This is certainly the case but the trends in income
tax and VAT receipts are a cause for concern, and may be an issue in the next
review in July if these trends continue. The IMF also noted the Irish
authorities “strong commitment” to the 3% of GDP budget deficit target in 2015.
Given that the IMF’s forecast in its Fiscal Monitor last week put Ireland’s
deficit at 4.3% of GDP in 2015, it then must also believe that it will be
discussing further fiscal consolidation measures with the Irish authorities over
the coming years.
A lot of water has to pass under the bridge by that time though. The most
important will be the introduction of the European Stability Mechanism (ESM) in
mid-2013, where, should Ireland be unable to finance itself in the markets by
that time, it will need to apply for financing. At this time, a debt
sustainability test will be completed. Clearly, Ireland’s immediate concern is
to close its primary deficit (budget deficit excluding interest payments). Any
amount of restructuring will not solve this particular problem.
Nevertheless, we note that authorities, including German officials and the
IMF (according to the Wall Street Journal) are now actively considering
restructuring of Greek debt, with Brady Bond-type lengthening of maturities
being considered. Greek debt levels, at over 150% of GDP this year, are much
higher than Ireland, but it is interesting nonetheless to hear that the topic is
being discussed at high levels. It is a topic we will be returning to a lot, we
The MSCI Asia Pacific
Index fell 0.1% Monday after China increased its banks’ reserve requirements on
Sunday and the People's Bank of China Governor Zhou Xiaochuan said monetary
tightening will continue for some time.
Japan's Nikkei 225 slid 0.36%; China's Shanghai composite index rose 0.22%;
Australia's S&P/ASX 200 Index added 0.22% and the Bombay Stock Exchange's Sensex
index dipped 0.93% in Mumbai.
Europe, the Dow Jones Stoxx 600 is off 0.10% in early trading Monday.
ISEQ has risen 0.09% in Dublin.
is off 0.99%; Elan has risen 2.82%; AIB has dipped 4.26% IL&P is up 5.88%.
Kenmare Resources has
Kenmare has announced
results to end-December 2010. Production of heavy minerals was up 16% to 956,900
tonnes, of which ilmenite made up 678,400 tonnes (+44%); zircon was 37,100
tonnes (+76%); and rutile was 4,700 tonnes (+161%). This production generated
sales of $91.6m and EBITDA of $17.4m. After finance and other costs the group
returned a net loss before tax of $16.3m. Net debt at the end of the year was
just under $100m compared to $339m at the end of 2009.
BDI closed at 3,005 on Thursday, Dec 31st - - a rise of 289% in 2009. The index
averaged 59% lower in 2009 than a year earlier.
Thursday, July 15, 2010, the index fell for the 35th straight session, by 9
points, or 0.537%, to 1,700 points,
On Friday July16th, the BDI rose 20
points or 1.12% to 1,700 to break the 35-session losing streak.
Friday last week, the BDI slipped 13 points or 0.99% at 1,296.
The Financial Times reported
earlier in January, that Australia’s flooding and fears of ship oversupply has
pushed down a gauge of the cost of hiring ships to carry coal, iron ore and
other dry bulk by nearly half since October to the lowest level since the
aftermath of the financial crisis. The Baltic Dry index, the widely watched
measure of dry bulk charter rates, fell to 1,453, nearly half the 2,784 peak
reached on October 27, 2010.
margin between the US benchmark WTI (West Texas Intermediate) used on the New
York Mercantile Exchange and Brent is over $14.
said in early February that a surge in oil inventories in Cushing, Oklahoma,
where WTI is delivered into America’s pipeline system, has depressed the value
of the benchmark against other yardsticks. The
International Energy Agency said on Thursday that with “few relief valves” to
cut the stock overhang in Cushing, the price dislocation “may persist for months
[or years] to come”.