Saturday 23 September 2017

ISEQ up on bondholder prospects

Peter Flanagan

Peter Flanagan

IRISH shares rose yesterday, as the revelation that the European Central Bank wanted to impose losses on senior bondholders in Spanish banks as part of its bailout raised the prospect of a reduction in sovereign debt for Ireland.

By the close of trading, the ISEQ Overall Index had added 1.29pc, or 41.2 points, to finish at 3,225.17.

Equities were positive throughout the session, albeit on relatively low volume. An evening rally, however, boosted the index to the closing level, which was the highest point of the day.

It was revealed that during the recent negotiations around Spain's €100bn bailout for its banks, ECB president Mario Draghi advocated for losses to be imposed on preferred investors to the banks.

Although the proposal was ultimately abandoned, it did raise hopes that Ireland may get some sort of deal on its bank debt.

Finance minister Michael Noonan has repeatedly claimed he wanted to impose haircuts on senior debtors in the then Anglo Irish Bank in particular, but then ECB head Jean Claude Trichet -- Mr Draghi's predecessor -- advised against it.

Support

"Any change in ECB policy could strengthen the Irish Government's hand in the negotiations to secure additional EU support to help Ireland's debt sustainability," said Davy Stockbroker's chief economist Conall MacCoille.

There was significant movement in the airlines sector yesterday, as Ryanair gained 1.25pc to reach €4.04, while Aer Lingus rose by a similar percentage to €1.06.

CRH added 3.03pc to close at €15.49. The construction giant rose after positive manufacturing data came out of the US, where CRH makes around half of its revenue.

Elsewhere, European stocks rose for a second day, extending the Stoxx Europe 600 Index's longest stretch of weekly gains in more than two years.

National benchmark indices rose in 11 of the 18 western European markets. Sweden's OMX Stockholm 30 increased 0.7pc and Germany's DAX climbed 0.1pc, while the UK's FTSE 100 and France's CAC 40 fell less than 0.1pc. The composite Stoxx Europe 600 advanced 0.2pc.

"As we go into August-September, there's a good possibility that we'll see a slight uptick in macroeconomic data, particularly in northern Europe and probably in the United States," said Robert Parker, senior adviser at Credit Suisse Asset Management.

"The earnings season will run another month and expectations are so negative that the downside risk is low."

Cove Energy sank 14pc after Royal Dutch Shell declined to raise its takeover offer, leaving Thailand's PTT Exploration as the highest bidder for the east Africa-focused energy explorer.

Irish Independent

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