PRODUCT PROFILE

Latest Dublin Prices

ISEQ steady-Merkel's confusing comments

Monday, October 22 08:59:50

The ISEQ is steady this morning at 3,240 although some European markets are lower on earnings concerns as the results season continues. What are we to make of the Angela Merkel comments over the weekend? NCB Stockbrokers have an opinion:

The twists and turns around a potential deal on bank debt continued over the weekend. On Friday Chancellor Merkel, responding to a query about Spanish banks, ruled out any back-dated recapitalisation. This led to understandable concerns around her stance towards Ireland's legacy bank debt, prompting hurried diplomatic moves from Dublin.

Since then, we have seen a softening in tone. Firstly, the German government issued a statement on Saturday saying that it will work closely with Ireland to "improve the sustainability" of the bailout programme. This was followed on Sunday by a joint statement after telephone discussions between the Chancellor and the Taoiseach which said the leaders had: "discussed the unique circumstances behind Ireland's banking and sovereign debt crisis, and Ireland's plans for a full return to the markets. In this regard they reaffirmed the commitment from June 29th to task the Eurogroup to examine the situation of the Irish financial sector with a view to further improving the sustainability of the well performing adjustment programme.

They recognise in this context, that Ireland is a special case, and that the Eurogroup will take that into account". While the use of terms such as 'unique' and 'special case' will presumably soothe some of the concerns that followed Merkel's recapitalisation remarks, the lack of any explicit commitments on the bank debt issue means that these concerns are unlikely to entirely go away according to NCB Stockbrokers.