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ISEQ rebound on hope for Irish debt deal

Thursday, February 07 12:51:17

The ISEQ rebounded from yesterday's fall amid rising hopes that Ireland will get a deal from the ECB on IBRC debt after the Government rushed through emergency legislation to wind up the former Anglo Irish last night.

By 12:45, the ISEQ was up 29.48 points to 3,546.20.

The European Central Bank moved towards agreeing a deal today to ease Ireland's debt burden after the Government rushed through emergency legislation to liquidate the former Anglo Irish Bank last night. Taoiseach Enda Kenny has staked his administration's reputation on cutting the cost of bailing out Anglo Irish, now known as Irish Bank Resolution Corp, or IBRC, and the ECB's governing council in Frankfurt was considering a fresh proposal after rejecting a previous plan last month. A deal had appeared imminent yesterday afternoon but officials decided further work was needed, one source close to the negotiations told Reuters. The ECB Council was discussing an Irish deal at its regular, twice-monthly meeting today. "Last night's liquidation of IBRC is the first step in a potential deal on the promissory notes, extending the term of cheap ECB funding. The term extension of potential ECB funding and cost are not yet known. But potentially E1bn (0.6pc of GDP) could be taken off Ireland's debt service bill. The E6.2bn funding requirement in 2013 and E3.1bn in 2014 could be relieved. These are significant developments, but do not transform the underlying budgetary arithmetic. Suffice to say, no write-down in the original E31bn loan from the ECB seems likely," said Davy Research this morning.

CRH shares climbed 15c to E15.40. HeidelbergCement has reported Q4 EBITDA of E691m (+8pc yoy / +4pclfl) which is 7pc ahead of consensus. This was largely driven by margins as cash cost savings reached E384m in the year versus management guidance that it was confident that it would exceed E300m. On the outlook, management expects the recovery to continue in the US, especially in the residential sector. In Europe and Central Asia, while markets will be stable or continue to grow in Germany, Northern Europe, Russia and Central Asia, weak markets are expected in all other markets (i.e. UK, Benelux, Ukraine, Poland, Czech Republic, Romania, Georgia and Kazakhstan). "These results in our opinion highlight to us why CRH's profit development is likely to underperform due to: (i) A larger exposure to mainland Europe and limited presence in emerging markets: (ii) No cement in the US; and (iii) Relatively less self-help," said Goodbody's Robert Eason.

This morning Britain's Bellway released a trading update for the six months to the end of January 2013. The group sold 2,597 homes in the period, up 6pc yoy. The average selling price increased by over 2pc to £187,000 driven by changes in geographic and product mix. Shares in Grafton rose 8c to E4.52.

By Joe Downes