| Click for the Finfacts Ireland Portal Homepage |

Finfacts Business News Centre

Home 
 
 News
 Irish
 Irish Economy
 EU Economy
 US Economy
 UK Economy
 Global Economy
 International
 Property
 Innovation
 
 Analysis/Comment
 
 Asia Economy

RSS FEED


How to use our RSS feed

Follow Finfacts on Twitter

 
Web Finfacts

See Search Box lower down this column for searches of Finfacts news pages. Where there may be the odd special character missing from an older page, it's a problem that developed when Interactive Tools upgraded to a new content management system.

Welcome

Finfacts is Ireland's leading business information site and you are in its business news section.

Links

Finfacts Homepage

Irish Share Prices

Euribor Daily Rates

Irish Economy

Global Income Per Capita

Global Cost of Living

Irish Tax - Income/Corporate

Global News

Bloomberg News

CNN Money

Cnet Tech News

Newspapers

Irish Independent

Irish Times

Irish Examiner

New York Times

Financial Times

Technology News

 

Feedback

 

Content Management by interactivetools.com.

News : International Last Updated: Apr 10, 2013 - 1:56 PM


Markets: EU bailout loans to Ireland/ Portugal maybe extended by 7 years
By Finfacts Team
Apr 10, 2013 - 11:13 AM

Email this article
 Printer friendly page
Angela Merkel, German chancellor, met youth ambassadors of development policy advocacy organization ONE in the Chancellery, Berlin, April 08, 2013. Irish singer Bono, a co-founder of ONE, is on Merkel's right. Sipho Moyo, a director of ONE in Africa, is on her left

Reuters reports that Ireland and Portugal should get 7 more years to repay loans from the EU to facilitate their return to full market financing, a recommendation from international lenders to EU policy-makers says.

Ireland and Portugal received emergency loans from the EU in 2010 and 2011 respectively after investors refused to lend to them at sustainable prices.

The average maturity on Ireland's EU loans stands at about 12 years. By extending the maturity, the payments are spread over a longer time, reducing the burden on the countries. Ireland will need to roll-over around €20bn a year in 2016-2020 while Portugal will need the same amount per year between 2015 and 2021, a paper prepared for junior EU finance ministers and central bankers said.

The paper was drafted by representatives of the European Central Bank, the European Commission, the International Monetary Fund – the troika – and the European Financial Stability Facility (EFSF). It will be presented to EU ministers who meet in Dublin on Friday and Saturday to discuss the extensions.

Michael Noonan, Finance Minister,  said in Limerick last weekend that no decision will be taken this weekend at the finance ministers' meeting.

Economic View:  Seven year term extension appears likely: Dermot O'Leary, chief economist Goodbody, comments - - "Ireland and Portugal look set to get a seven-year extension to its official loan terms. The question now is one of timing on its ratification, with a final decision unlikely to be made at this week’s Ecofin meeting, as discussed yesterday.

Following on from initial indications in yesterday’s Financial Times, Reuters reports on the Troika proposals. The paper considered term extensions of 2.5 years, 5, 7 and 10 years and more. The shorter term extensions were rejected as they were not considered beneficial enough to Ireland and Portugal, while longer extensions were considered too risky for future EU budgets. As a result, the paper is quoted as thus: 'An extension of the maximum average maturity by 7 years would provide a balanced compromise between the lender and creditor constraints.'

As a reminder, Ireland has €18.4bn in EFSF/EFSM loans maturing over the 2015-2021 period, with more than half of this amount maturing in 2015 and 2016. A decision to extend the maturities would help to smooth the funding profile in the immediate aftermath of Ireland’s programme. Positive noises are expected from this week’s Ecofin, but final ratification will have to wait until May."

Ireland's EU bailout loan extension proposals leaked: Conall Mac Coille, chief economist of Davy, comments - - "Reuters reported yesterday that it had seen leaked Troika proposals for a seven-year extension of Ireland's EU bailout loans, over and above the original 12.5-year term. These proposals could halve Ireland's funding needs in 2015 and by around one-third in 2016. However, agreement at this week's Eurogroup meeting of finance ministers may be elusive given uncertainties on the implementation of Portugal's deficit reduction plan.
Troika proposals to extend Ireland's EU bailout loans by seven years

Stock indices closed up yesterday. The Euro Stoxx 50 rose 0.2% and the S&P 500 gained 0.4%. Better-than-expected earnings from Alcoa Inc. failed to ignite risk appetite. Today, European industrial production data are likely to signal that output fell again in the first quarter of 2013. Markets will also focus on the minutes of the Federal Reserve.

Reuters reported yesterday that it had seen Troika (ECB, European Commission and IMF) proposals for an extension of Ireland's and Portugal's EU bailout loans. The proposals apparently envisage a seven-year extension of Ireland's bailout loans, over and above the original 12.5-year maturity.

If so, this extension would be sufficient to defer the €5bn of EFSF loans maturing in 2015 and the €1.3bn and €4.2bn EFSM loans maturing in 2015 and 2016 respectively. Extending these maturities would relieve Ireland of €10.5bn of funding needs in 2015-2016. Together with the recent deal to extend ECB funding support and wind up IBRC, the sovereign's borrowing requirement in 2015 could be halved from €18bn to €9bn. In 2016, the borrowing requirement could fall from €22.5bn to €15.7bn.

However, Minister for Finance Michael Noonan has downplayed the likelihood of significant developments at this week's Eurogroup meeting on April 12th in Dublin. This may reflect the recent Portuguese constitutional court rulings against planned public sector pay cuts. European finance ministers may be reluctant to ease the pressure on Portugal as it seeks new expenditure savings. So agreement to adopt the Troika's proposals to extend EU bailout loans may be delayed by the uncertainties in Portugal."

Banks 1: Departure of deputy governor of Central Bank; Eamonn Hughes and Colm Foley comment - - "The Central Bank announced yesterday that the Deputy Governor and Head of Financial Regulation, Matthew Elderfield, is to leave his role in 6 months and return to London and will step back from any supervisory functions with immediate effect. Mr Elderfield joined the Central Bank in 2010 and played a central role in stabilising the domestic financial sector, being at the helm through the stress tests and the substantial restructuring of the banking system, including policy on mortgage arrears.

The Irish Central Bank is split into 3 divisions (monetary policy, financial regulation and operations), all reporting into the Governor (Patrick Honohan). The Bank will probably look to advertise internally and externally and it’s hard to call at this early stage, but should it be an internal appointment the current Director of Credit Institutions & Insurance Supervision (Fiona Muldoon) is probably the most high-profile candidate from within Mr Elderfield’s department.

Odds from Paddy Power show two names in the Department of Finance (John Moran and Ann Nolan) as early favourites for the job, but our best guess at this stage remains an internal candidate to ensure continuity of policy. Mr Elderfield’s appointment in 2010 coincided with a step change in regulation in Ireland following the “light-touch” approach previously. The current changing of the guard is unlikely to drive as much change."

Banks 2: EU proposals on bank bail-ins; Hughes and Foley added -- "According to Bloomberg, lawmakers in Europe are currently evaluating the draft European legislation on bank failures that would only allow deposits to be written down after losses have been imposed on other unsecured debt. “Uninsured deposits should be within the scope,” of the so-called bail-in rules a legislator leading the work on these proposals said in an e-mail. 'However, they should be given a preferential treatment in the hierarchy and rank above unsecured bondholders to make sure risks to depositors are minimized.'

Elsewhere, press reports overnight indicate that in an early stage paper dated April 5, authorities are considering incorporating interbank liabilities of less than one month into bank bail-ins. Whilst previously excluded from proposals, the EU is worried about banks becoming overly dependent on short term interbank deposits and these instruments will not be excluded under the current discussions, a proposal likely to receive some pushback. In addition, liabilities of greater than one month arising from payments, clearing and settlement systems should be bailed-in as necessary, in addition to deposits owed to large corporate, financial companies and authorities. Insured depositors holding less than €100,000 would be protected as was the case (finally) in Cyprus. Furthermore, under current proposals, bank bail-ins would have applied from 2018 but new proposals (from the German, Dutch, Danish and Finnish governments) seek to have the rules amended as early as 2015, similar to the view held by the ECB president.

After Cyprus, European policymakers are increasingly willing to contemplate spreading the cost of bank failures to private investors, a factor likely to drive up funding costs for the European banking sector and ultimately customers."

Justin Doyle, Investec Bank Ireland, said today:

  • "As US and Japanese equity markets post fresh, dizzying highs again overnight the ECB must be looking enviously on. Divergent economies and divergent monetary policies have never been more glaringly obvious. The ECB may argue that the Fed and the BoJ’s massive monetary stimulus plans are only sticking plasters on very deep wounds but at first glance the ECB appear to be laggards in a very competitive race. Currency wars? never;
  • The BoJ’s recent actions have pushed the JPY to multi year lows. The EUR/JPY has just broken over 130.00, its highest level since January of 2010. With an almost 40% weakening of the value of JPY against the EUR in less than 6 months we may just be seeing the price of those iconic Japanese consumer goods finally come down in price. Watch out South Korea the Japanese mean business;
  • Staying on the subject of Central Banks and their respective monetary policies the spotlight swings back to the US this evening as the Feds releases it’s FOMC minutes of the March 19-20 meeting. We feel the tone will be less dovish than usual and as the U.S. continues it spluttering recovery we think there will have been more chatter surrounding the possibility of tapering their QE3 purchases before year-end;
  • Wording is everything and if you remember the markets negative reaction to the January minutes, in early February after they alluded to several members discussing an early exit. After that blooper Mr. Bernanke and his Fed footsoldiers spent most of the remainder of that month reassuring the markets that an early exit was still a long way off, hence new highs in the Dow Jones and S&P 500 indexes in recent weeks. God bless Ben."

Fastnet Oil and Gas, the exploration company, said today that the latest independent assessment of its Shanagarry licence in the North Celtic Sea confirms the significant resource potential of the site.

The Shanagarry licence covers an areas of 123 square km and is comparable in size to the Kinsale gas field and Barryroe oil field off West Cork

Fastnet said it the Celtic Sea is set to be transformed over the next 12 months as it once again becomes Ireland's foremost oil and gas basin.

US Markets

In New York Tuesday, the Dow rose 60 points or 0.41% to 14,673.

The S&P 500 added 0.35% and the Nasdaq advanced 0.48%.

Asia Markets

The MSCI Asia Pacific rose 0.9% in Tokyo Wednesday.

The Nikkei 225 gained 0.73%; China's Shanghai Composite Index rose 0.02%; Korea's Kospi climbed 0.77%; Australia's S&P/ASX 200 fell 0.18% and in Mumbai, the Bombay Stock Exchange's S&P BSE 100 index advanced 0.93%.

Europe Markets

In Europe, the Dow Jones Stoxx Europe 600 is up 0.70% in mid-morning trading Wednesday.

In Dublin, the ISEQ is up 0.48%.

Glanbia id off 0.52%.

European Benchmarks

Irish Share Prices

Key Index Performance Statistics

Euribor Rates

AIB Daily Report

Bank of Ireland Daily Report

Currencies

The euro is trading at $1.3101 and at £0.8548.

For live currency updates, check the right-hand column of the Finfacts home page.

The US dollar fell to $1.6038 per euro on Tuesday, July 15, 2008 - an-all time record.

Commodities

The Baltic Dry Index, a measure of shipping costs for dry commodities, hit an all-time High of 11,771 on the 21st of May, 2008. From that time it reversed and on the 5th of December, 2008 it hit a low of 663 - - close to a 1986 low.

On Thursday, July 15, 2010, the index fell for the 35th straight session, by 9 points, or 0.537%, to 1,700 points, Bloomberg report.

On Tuesday, the BDI fell 2 points or 0.23% to 856 - - the BDI is up 22.46% in 2013

Crude oil for May 2013 delivery is currently trading on the Chicago York Mercantile Exchange (CME/Nymex) at $93.96 down 24 cents from Tuesday's close.. In London, Brent for May delivery is trading on the International Commodities Exchange at $106.14. The North Sea benchmark accounts for two-thirds of the global market.

Bloomberg reports that for the first year since the futures were created, Brent crude is poised to overtake West Texas Intermediate (WTI) oil as the world’s most-traded commodity.

Daily trading in Brent jumped 14% to average 567,000 contracts in the year to November 20 compared with all of 2011, while WTI fell 17% to 575,000, according to data from the ICE Futures Europe exchange in London and New York Mercantile Exchange compiled by Bloomberg. The number of Brent futures changing hands has exceeded those for WTI every month from April through October, the longest streak since at least 1995.

Brent, produced in the North Sea, is gaining favour among traders because of its role as the benchmark for energy prices from Saudi Arabia to Russia. Prices have climbed 34% in the past two years, reflecting everything from war in Libya to the embargo on Iran. WTI, the main grade in the US, has risen 9% as the nation, which prohibits crude exports, has struggled to clear a glut at Cushing, Oklahoma, the delivery point for Nymex futures.

Gold spot price

The spot price of an oz of gold is trading in New York at $1580.50 down $4.50 from Tuesday's closing in New York.

Gold had hit a record high of $1,921.05 a troy ounce on Sept 06, 2011.

Check out our subscription service, Finfacts Premium , at a low annual charge of €25 - - if you are a regular user of Finfacts, 50 euro cent a week is hardly a huge ask to support the service.

Related Articles
403 Forbidden

Forbidden

Execute access is denied.


© Copyright 2011 by Finfacts.com

Top of Page

International
Latest Headlines
Friday Newspaper Review - Irish Business News and International Stories - - October 31, 2014
Thursday Newspaper Review - Irish Business News and International Stories - - October 30, 2014
Wednesday Newspaper Review - Irish Business News and International Stories - - October 29, 2014
Tuesday Newspaper Review - Irish Business News and International Stories - - October 28, 2014
Friday Newspaper Review - Irish Business News and International Stories - - October 24, 2014
Wednesday Newspaper Review - Irish Business News and International Stories - - October 22, 2014
Tuesday Newspaper Review - Irish Business News and International Stories - - October 21, 2014
Monday Newspaper Review - Irish Business News and International Stories - - October 20, 2014
Friday Newspaper Review - Irish Business News and International Stories - - October 17, 2014
Thursday Newspaper Review - Irish Business News and International Stories - - October 16, 2014
Wednesday Newspaper Review - Irish Business News and International Stories - - October 15, 2014
Monday Newspaper Review - Irish Business News and International Stories - - October 13, 2014
Friday Newspaper Review - Irish Business News and International Stories - - October 10, 2014
Thursday Newspaper Review - Irish Business News and International Stories - - October 09, 2014
Wednesday Newspaper Review - Irish Business News and International Stories - - October 08, 2014
Tuesday Newspaper Review - Irish Business News and International Stories - - October 07, 2014
Monday Newspaper Review - Irish Business News and International Stories - - October 06, 2014
Thursday Newspaper Review - Irish Business News and International Stories - - October 02, 2014
Wednesday Newspaper Review - Irish Business News and International Stories - - October 01, 2014
Monday Newspaper Review - Irish Business News and International Stories - - September 29, 2014
Friday Newspaper Review - Irish Business News and International Stories - - September 26, 2014
Thursday Newspaper Review - Irish Business News and International Stories - - September 25, 2014
Wednesday Newspaper Review - Irish Business News and International Stories - - September 24, 2014
Tuesday Newspaper Review - Irish Business News and International Stories - - September 23, 2014
Monday Newspaper Review - Irish Business News and International Stories - - September 22, 2014
Friday Newspaper Review - Irish Business News and International Stories - - September 19, 2014
Wednesday Newspaper Review - Irish Business News and International Stories - - September 17, 2014
Tuesday Newspaper Review - Irish Business News and International Stories - - September 16, 2014
Monday Newspaper Review - Irish Business News and International Stories - - September 15, 2014
Friday Newspaper Review - Irish Business News and International Stories - - September 12, 2014
Thursday Newspaper Review - Irish Business News and International Stories - - September 11, 2014
Wednesday Newspaper Review - Irish Business News and International Stories - - September 10, 2014
Tuesday Newspaper Review - Irish Business News and International Stories - - September 09, 2014
Monday Newspaper Review - Irish Business News and International Stories - - September 08, 2014
Friday Newspaper Review - Irish Business News and International Stories - - September 05, 2014
Thursday Newspaper Review - Irish Business News and International Stories - - September 04, 2014
Monday Newspaper Review - Irish Business News and International Stories - - September 01, 2014
Friday Newspaper Review - Irish Business News and International Stories - - August 29, 2014
Thursday Newspaper Review - Irish Business News and International Stories - - August 28, 2014
Wednesday Newspaper Review - Irish Business News and International Stories - - August 27, 2014