PRODUCT PROFILE

Latest Dublin Prices

Roundup-Bord Gais is readied for sale

Friday, September 21 08:19:17

The auction process to sell state-owned Bord Gais Energy (BGE) will kick off in the first quarter of next year, the Irish Independent has learned. The sale of BGE is to be the first privatisation under the Government's New Era programme, which aims to raise E3bn through the disposal of state assets, including shares in Aer Lingus; Coillte's assets, excluding its land banks; and some ESB assets.

The Bord Gais Energy sale will not include the Bord Gais network infrastructure. An adviser is to be appointed imminently to help manage the sale, tasked at setting a valuation for the business, organising the sale process and drumming up interest in the asset. Responsibility for the entire privatisation programme sale lies with the New Era unit of the NTMA.

The BGE business being put up for sale is reckoned to be valued at between E1bn and E1.4bn. BGE has three main operating areas. Its retail arm has 468,000 gas and 407,000 electricity customers. Its trading unit is responsible for the procurement of gas, electricity and carbon, as was portfolio optimisation, risk management, hedging and trading strategies and market modelling. The Irish Independent

XXXX

The yield on the benchmark nine-year government bond dropped below 5 per cent yesterday morning for the first time in more than two years. The nine-year yields dropped to 4.99 per cent, the lowest yield since August 2010, several months before the State was bailed out.

The rate on the 2020 bonds was 9 per cent when the Government applied for the EU-IMF programme in late November 2010. The rally in the bond market to date this year is the second strongest in the euro region in 2012, trailing only fellow bailout recipient Portugal. "Sentiment has changed a lot since July," said Michael Cummins of Dublin-based Glas Securities.

"The July summit indicated Ireland would get some sort of additional relief. This combined with the ECB bond-buying plan has led to increased demand. "Ireland is in a good position now relative to other peripheral countries in the sense that there is no immediate refinancing pressure. This lack of supply and increased demand dynamic is driving the aggressive move in Irish yields."

While the State now borrows largely from the troika, the fact that Irish bond yields are falling raises the possibility of a full return to the bond markets and strengthens the chances of emerging from the bailout programme next year without requiring further support. The Irish Times

XXXX

When clothing retailer Primark first expanded into continental Europe, opening up two stores in Spain in 2006, it looked like a logical move. The country was riding the crest of an economic wave that had made it one of Europe's most attractive markets. But when the company opened two more stores in the country this month - in Pamplona and Badajoz - Spain was showing few signs of emerging from its worst slump in living memory. The retailer will open another six Spanish stores by the end of November, an expansion that will give it a presence in the country of 35 shops, employing 5,500 people. It will have 250 stores across Europe.

It is a mark of Primark's confidence that it feels it can become a major presence in Spain despite the state of the economy. "Sales remain buoyant," Primark said. "Our expansion in Spain, despite the challenging economic climate, is testament to our fashion forward designs and our competitive prices." Maureen Hinton, a retail analyst at Verdict Research, says the appeal of Primark - often jokingly nicknamed "Primarni" - is based on "low-price good products in a great store environment". The pricing factor, she says, should help it draw customers in a country that has 25 per cent unemployment, a banking crisis and which faces the possibility of a sovereign EU bailout in the coming weeks. Verdict Research expects spending on clothes in Spain to drop by 1.5 per cent between now and 2016, its bleakest forecast for any European country except Greece. (Poland tops the company's outlook, with Irish spending expected to remain flat during that period). The Irish Times

XXXX

Alice Kramer, wife of the former Nama executive who is facing a criminal investigation for allegedly taking confidential information from the agency, has left her job at professional services firm, Ernst & Young. The High Court heard last week that former Nama senior portfolio manager Enda Farrell e-mailed confidential documents to Ms Kramer before he left the agency in March to join private equity group, Forum Partners.

His action sparked investigations at Nama and at Ernst & Young, which carried out its own inquiry following a request from the State agency. The firm has completed its inquiry and passed the results to Nama. It is understood Ms Kramer resigned from Ernst & Young within the last few days. She had a senior role in a division advising clients on compliance and other issues. Ernst & Young has not commented beyond confirming that it carried out an investigation and passed its findings on to Nama. The agency confirmed last week that it reported to the Garda that an internal investigation showed a former employee had taken confidential information without authorisation. The Irish Times

XXXX

The Government was on alert last night after US lawmakers described the country as a "tax haven" and accused American technology companies operating here of using Ireland to avoid paying corporation tax at home. The US Senate's Permanent Subcommittee on Investigations has begun a probe into how American companies funnel international profits through countries such as Ireland with lower corporation tax rates than the US.

Using Microsoft and Hewlett Packard as case studies, the committee chairman Carl Levin said "the tax practices and gimmicks range from egregious to dubious validity". If the US does prevent companies from using Ireland for tax purposes it could have a dire effect on the economy. Numerous companies, including Google, Facebook and Microsoft, who between them employ more than 4,000 people here, are believed to use Ireland for its tax efficiencies. A government spokesman declined to comment, while a spokesman for the IDA, which has attracted most of the firms here, said the agency was studying the report but declined to comment further. The Irish Independent