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Minister of State at the Department of Agriculture, Food and the Marine, Shane McEntee, has marked the passage into law of the Welfare of Greyhounds Act 2011 by visiting the greyhound premises of one of the country’s leading breeders and trainers, Pat Savage, near Slane, county Meath. Is the country going to the dogs?
Economic View; House prices now back to
2000 levels: Dermot O’Leary, chief economist at
Goodbody, comments - - "The four and a half year
journey downwards in Irish property prices continued in October. Not only that,
Irish residential property prices fell by 2.2% mom, the fastest pace since April
2009 in October, according to data released by the CSO yesterday. This took the
annual rate of decline to -15.1% (from -14.3% in September), with every category
seeing an acceleration in the rate of annual decline.
Overall, the official index suggests that residential property prices have
fallen by 45% from the 2007 peak, taking prices back to levels last seen in
mid-2000. Apartment prices in Dublin have seen the most severe declines, both
for 2011 thus far and from the peak. From the peak, apartment prices in Dublin
are now down by an average 60%. Dublin house prices are down by 51% from the
peak, compared to a 42% decline for houses outside the capital.
It is likely that increased price discovery over recent months due to
high-profile property auctions has increased transparency in the property
market, leading to lower prices. These auctions show that, at the margin,
transactions are taking place at prices 60%+ below 2006 levels. The majority of
these transactions are in the form of cash and would not get reported in the
As we learned last week from the Irish Banking Federation (IBF) mortgage
statistics, liquidity in the market remains very low, with mortgage transactions
set to fall to the lowest level since 1971 this year. Access to mortgage credit
is a prerequisite for stabilisation in prices."
Bank of Ireland (Closing Price €0.078):
Offers to buy back mortgage securitisation; Eamonn
Hughes, head of research at Goodbody, comments - - "BOI
yesterday afternoon offered to buy back up to €1bn of securitised mortgages. The
€1.5bn of Kildare and €1.8bn of Brunel No 1 securities will see BOI offer a
minimum purchase price ranging from 28-92%, though closer to the latter on the
larger chunks of the portfolios. The offer will close on December 1 and will be
a modified Dutch auction. The bank has indicated that it will not initiate the
exercise of the early redemption options for the notes on the relevant step-up
dates in March and April 2012, so investors in the instruments looking to exit
may take the opportunity of the current offer.
Securitisations are a cheap source of long term funding and the move will take
the mortgages back on the bank’s balance sheet, so the move yesterday surprised
us, though it appears to have the support of the Central Bank. The arrears level
on the portfolios (4.6% in September) is lower than the main book (5.2% for the
loan book in June). Should the assets be tendered below par and the book is
performing relatively well, so haircuts are likely to be tight, there could be
some gains for the bank, with some speculation that the bank could generate
about €200m from the transaction. This could be worth about 0.6c to NAV or half
that on our valuation (we use 0.5x valuation metric, though bear in mind that
distressed banks in Europe are trading on lower than that (for instance, Lloyds
and RBS are trading on two thirds of that again, closer to 0.3x!)."
UK public finances under scrutiny:
Conall Mac Coille, chief economist at Davy, comments - - "On November 29th, the UK Office for Budgetary Responsibility
(OBR) will publish its updated forecasts for the economy and public finances.
And last night, UK prime minister David Cameron warned that the OBR will be
downgrading its forecasts for both GDP growth and the government deficit and
debt. Indeed, UK public finance figures released this morning are likely to show
that tax revenue growth continues to fall behind expectations. In the first six
months, current receipts had grown by 4.9%, well below the 6.9% expansion
expected for the full budget year.
So, the coalition government will be faced
with very difficult choices heading into the March 2012 Budget. On one hand,
additional austerity measures will hurt the UK economy, already on the brink of
a double-dip recession. But failure to hit the targets set out in last year's
budget would risk a sharp turnaround in market sentiment towards UK gilts.
Recent events in Europe have meant that the UK
has been a relative safe haven for bond markets. The yield on 10-year UK gilts
is currently 2.2%. But the pace and magnitude of the fiscal adjustment being
attempted in the UK is very similar to that in Ireland. In the March Budget, the
coalition government was targeting a deficit of 7.9% of GDP in 2011 and 6.2% of
GDP in 2012, gradually closing to 1.5% by 2015. And the government debt-to-GDP
ratio was expected to peak at 87.2% in 2013.
However, these targets were predicated on
budgetary expectations for UK GDP growth of 1.7% in 2011 and 2.5% in 2012.
Current consensus forecasts are for 1.0% GDP growth in 2011 and 1.1% in 2012.
With growth weaker than expected, the UK is likely to run a budget deficit close
to 10% of GDP for a second year running, and government debt is likely to peak
above 90% of GDP. So, without additional austerity measures, market sentiment
towards UK gilts could turn more quickly than expected."
Spain Due to Pay High Borrowing Costs in Debt Auction: Baldomero Falcones, CEO & chairman of the FCC, joined CNBC, to discuss the implications of the Spanish debt auction:
In New York Monday, the Dow dipped 249 points or
The S&P 500 slid 1.86% and the Nasdaq slipped
The MSCI Asia Pacific fell
Japan's Nikkei 225 dropped
0.40%; China's Shanghai Composite dropped 0.10%; Australia's S&P/ASX 200
declined 0.72% and the Bombay Stock Exchange Sensex 30 index in Mumbai added
1.58%. South Korea's Kospi climbed 0.55%.
The margin between the US benchmark WTI (West
Texas Intermediate) used on the New York Mercantile Exchange and Brent is over $9 - - The Globe and Mail says that for the past 10 months, Canadian
producers - - whose prices are tied to WTI - - have been taking steep discounts
for their oil compared with international crude prices that are benchmarked
against North Sea Brent, which can be shipped more readily. In the past, WTI
tended to trade at a small premium to Brent, because it is easier to refine.
That spread hit a peak of
$28.08 (U.S.) on Oct. 14, but has fallen dramatically since then. After plans
for more pipeline capacity at Cushing, Oklahoma, the differential narrowed by
nearly $4; it widened slightly Thursday to $8.27 (U.S.), as both WTI and Brent