|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
Ireland and Portugal received emergency loans from
the EU in 2010 and 2011 respectively after investors refused to lend to them at
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
Michael Noonan, Finance Minister, said in
Limerick last weekend that no decision will be taken this weekend at the finance
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
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
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
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.
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%.
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%.
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%.
Key Index Performance
Bank of Ireland Daily Report
The euro is
trading at $1.3101 and at £0.8548.
For live currency updates, check the right-hand
column of the Finfacts home
The US dollar
fell to $1.6038 per euro on Tuesday, July 15, 2008 - an-all time record.
The Baltic Dry
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,
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.
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.
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.
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.