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Roundup-Cost of Irish borrowing falls

Thursday, September 13 08:17:55

The cost of Irish borrowing fell dramatically yesterday after Germany's constitutional court ruled that the European Stability Mechanism (ESM) was compatible with German law. Yields on the benchmark nine-year note yield fell 21 basis points to 5.39pc in afternoon trading as investors welcomed the ruling. The yield on five-year bonds fell 40 basis points to 4.1pc, which pushed yields on both bonds to their lowest levels since August 2010. Yields on two-year bonds fell below 2pc.

Yields for Spanish and Portuguese bonds also fell, while European shares rose to fresh highs as investors cheered the ruling, which will allow political leaders to take new steps to tackle the eurozone's debt crisis. "The backdrop created by the German (constitutional court) ruling this morning is extremely positive," National Treasury Management Agency boss John Corrigan said yesterday. He said Irish borrowing costs may drop further in the months ahead because of the court ruling, the ECB's recent decision to allow unlimited bond buying and actions taken by the NTMA itself. The Irish Independent

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Paul Appleby, head of Corporate Enforcement has raised the possibility of the administrators of Quinn Insurance being able to take an action for reckless trading against the former directors of the company. The outgoing head of Corporate Enforcement said the administrators could take seek a declaration of personal liability in the High Court.

The bill left by the Quinn Insurance debacle is expected to be up to E1.6 billion. That is being met by a 2pc levy on all general insurance policies purchased by consumers. Last month the outgoing head of Corporate Enforcement Paul Appleby said the administrators could take an action for reckless trading. That could result in a declaration that former directors were personally liable. There is also the possibility that the directors could be prevented from being directors of any other company for periods up to ten years.

A Dublin based company controlled by Denis O'Brien is to earn $7.5 million (E5.8 million) in adviser fees from the $1.5 billion bond offering by Digicel Group Ltd, the Caribbean and Pacific islands mobile phone group owned by the wealthy Irish entrepreneur. The fees will be paid to Island Capital Services Ltd, which has an "advisory services and monitoring agreement" with Digicel, according to a 269-page document on the bond offering seen by The Irish Times.

The document also details other multimillion dollar payments by Digicel to companies controlled by Mr O'Brien. It shows that $44.4 million in fees was paid by Digicel to Island Capital, Communicorp, Ican and AC Executive Aviation Services Ltd over a three-year period to the end of March 2012. An additional $2.1 million was paid to Island Capital and Communicorp to reimburse them for expenses incurred for legal and professional fees, and travel and accommodation costs.

In the document, Digicel effectively acknowledges that it has not obtained a third-party "fairness" opinion as to whether these transactions with Mr O'Brien's companies represent good value for the company. "Therefore, while we believe them to be, they may not have been on or have terms as favourable to us as we could have obtained from unaffiliated third-parties in arms-length transactions," Digicel states in the bond document.

These payments are separate to Mr O'Brien's remuneration as Digicel's chairman and the dividends he receives from the mobile phone group as its 94 per cent shareholder. The Irish Times

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Former NAMA portfolio manager Enda Farrell allegedly sent more than 30 emails containing "highly confidential and commercially sensitive information" from the State agency to his wife, it emerged in the High Court yesterday. Nama has reported his actions, uncovered during an audit of a property deal the couple did while he was still working for the State agency, to the Garda. It said in a statement that it believed he may have committed a criminal offence under section 202 of the Act that established the agency.

His actions also sparked an investigation at professional services firm Ernst Young, which employs his wife, Alice Kramer. It is understood that the division for which she works advises on compliance. Ernst Young confirmed that it carried out the inquiry at Nama's request and passed its findings on to the agency, but did not comment any further. The couple bought a four-bedroom house and two acres of land at Sundays Well, Lucan, Co Dublin, from developer Thomas Dowd for E410,000 while Mr Farrell was working as a portfolio manager for the agency. The seller was one of its debtors.

After learning of the deal last month, Nama suspected the purchase may have breached its procedures and hired Deloitte to conduct an audit. Nama says that this uncovered confidential data that was taken without its authorisation. Nama has told the High Court it fears any such information could be used by others to gain a commercial advantage at its expense. The Irish Times

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Dublin's Merrion Hotel enjoyed a 40-fold increase in pre-tax profits last year as it played host to troika officials during their visits to the capital. Profits at the Merrion Hotel in Dublin rose to E1.39m last year as sales jumped 12.5pc to E15.32m in the 12 months to the end of October. The hotel made a profit of E34,599 in 2010 and losses of more than E500,000 in 2009 and 2008.

The boost in the hotel's fortunes co-incided with President Barack Obama's brief visit and the many lengthy visits by officials from the ECB and IMF. Mr Obama and his wife Michelle checked into the Merrion Hotel but did not stay overnight as planned due to their early departure from the country brought about by ash cloud disruption. The sharp rise in profits and the double-digit increase in revenues at the five-star hotel located opposite Government Buildings reflects the general pick-up in the Dublin hotel market last year. The Merrion has 123 rooms and 19 suites. Guests can pay anything from E250 for a standard room to E2,695 for the penthouse suite, although the hotel also offers various deals on its advertised rates. The Irish Independent