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ISEQ gets big boost from ECB bond plan

Thursday, September 06 17:37:02

The ISEQ powered ahead to close sharply up this afternoon after the ECB announced an aggressive bond-buying program to stop the spread of the euro zone's debt crisis.

The index closed 53.04 points higher at 3,226.94.

The ECB agreed to launch a new and potentially unlimited bond-buying programme to lower struggling euro zone countries' borrowing costs and draw a line under the debt crisis, ECB President Mario Draghi said today.

Seeking to back up his July pledge to do whatever it takes to preserve the euro, Draghi said the new plan, aimed at the secondary market, would address bond market distortions and "unfounded" fears of investors about the survival of the euro.

The scheme, which the Bundesbank is known to have opposed, would focus on bonds maturing within three years and was strictly within the ECB's mandate, Draghi said. Only one member of the ECB Governing Council had dissented, he said.

"Under appropriate conditions, we will have a fully effective backstop to prevent potentially destructive scenarios," Draghi told a news conference after the central bank's monthly meeting.

Shares in United Drug rose 4c to E2.64. In another blow to the depleted Irish stock exchange listings, healthcare services company, United Drug, today said it plans to delist from the ISEQ index of shares next month and move to London's FTSE. In a statement today, it said that the group has significantly grown its international operations and has seen a substantial increase in the presence of international investors on the company's share register. Its interim management statement of 14 August 2012 said it had been reviewing the listing arrangements for shares in United Drug in line with the Company's ongoing strategy to increase its international presence.

Smurfit Kappa Group has announced that it has placed E200m and $300m in 2018 bonds at coupons of 5.125pc and 4.875pc respectively. The proceeds of the bond issue will be used to pay down in full the 7.75pc senior subordinated 2015 bonds. The balance will be used to pay early redemption costs, estimated at under E5m, fees and senior debt. This action should result in an annualised interest cost saving of c.E10m. Shares in SKG climbed 24c to E6.95.