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ISEQ closes Prom Deal week on a high

Friday, February 08 17:37:18

The ISEQ closed the week on a multi-week high after yesterday's Prom deal with analysts confident that it will go some of the way to getting the economy back on track.

The index was up 49.11 points to 3,606.24.

Yesterday's "Prom deal" will reduce interest costs on Irish sovereign debt by close to E1bn per year over the next ten years and cut the country's borrowing needs by up to E20bn, but don't expect much easing up of austerity.

Ireland's General Government deficit will improve as a result of the new arrangement.

In 2013, it is unlikely to benefit thanks to up-front costs of the liquidation of IBRC all other things equal. But in each of 2014 and 2015, the General Government deficit may narrow by about 0.6 percentage points of GDP, the National Treasury Management Agency (NTMA) confirmed this morning.

Over the next decade, it is estimated that the funding requirement falls by around E20bn as result of this agreement, it said.

General Government debt is likely fall over time compared with the way things were before the Prom Deal.

Kerry Group lead the pack with shares up 30c to E39.45. International Flavours and Fragrances Q4 (and full year) results yesterday were broadly as expected with eps 1pc behind and sales 2pc ahead of market forecasts. In its Flavours Division, which is of most interest to the Kerry Ingredients operations, its like-for- like (lfl) sales increased by 7pc, with as much as 15pc growth in North America, driven by its beverage ingredients, which is also a targeted growth sector for Kerry. These are likely due to new business wins specific to IFF and as such not much read-through for Kerry and there are only modest overlaps with Kerry Ingredients operations (less than 10pc).

"Kerry results will be released on 26th February, in which we expect lfl growth of 3.3pc in Kerry Ingredients (3.9pc before "rationalised" volumes). The comments from IFF and Givaudan should help to set a positive tone for these results," Goodbody Stockbrokers said.

Shares in small-cap Petroneft fell 1c to E0.06 after it said it has started its fifth Russian well. While the latest update from PetroNeft outlines a rate of 140 bopd with no associated water production from well 112 in Arbuzovskoye, the failure to breach a total field production of 3,000 bopd is the main point of note in the statement this morning. "Production from Arbuzovskoye is pivotal in terms of increasing overall field production and generating cashflow to reduce net debt, which we estimate at $39.4m at the end of 2012. The failure to increase production since the update in December along with the mechanical issues encountered over the past few months is likely to weigh on the share price this morning," Goodbody's said.