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ISEQ dips on Prom Note worries

Monday, February 18 12:44:33

The ISEQ slipped in to the red this morning as talk of a possible unravelling of last week's Prom Note deal made the rounds.

By 12:30, the index was down 11.47 points to 3,652.10.

The deal reached with the ECB on the legacy Anglo promissory notes is not unravelling, the Government said today. Minister for Social Protection Joan Burton rejected suggestions that the promissory note deal is in danger from a revaluation by European authorities, saying it was "generally recognised" that the agreement was helpful to Ireland and the European Union. The ECB is re-examining Ireland's "prom deal" after ECB member Jens Weidmann last week said that he was "very concerned" the deal to liquidate IBRC and spin out the Anglo promissory notes might contravene EU law. "It will be very hard for the ECB to put pressure on the Central Bank to accelerate the pace of bond sales, particularly as Ireland emerges from the EU/IMF programme of funding support," Davy said.

Independent News and Media has confirmed that it has agreed detailed heads of terms for the sale of INM South Africa. The consideration is R2bn (around E170m at current EUR/ZAR) and the counterparty is Sekunjalo Independent Media Consortium. Although the terms have been agreed, the disposal is subject to approval from the shareholders of INM and the Competition Commission in South Africa. The process began in July 2012 when the company announced that it had appointed advisors to explore a range of strategic options relating to its South African business, with the objective of re-financing and de-leveraging its balance sheet. Shares in INM were flat at E0.03.

Shares in Grafton Group fell 3c to E4.76. The UK Builders Merchants Federation's (BMF) monthly sales figures (adjusted for price inflation and trading day differences) provide an insight into the health of the sector, especially the independents. The most recent data revealed that volumes fell c.0.5pc in 2012. This was the fifth consecutive year of contraction but the rate of decline moderated sharply in 2012. Indeed volumes in the second half were modestly higher than H2 2011 and rose 2.2pc year-on-year in Q4. This is encouraging for the quoted building distributors, namely Travis Perkins, Grafton, Wolseley, SIG and Saint-Gobain. While the overall UK economy will continue to provide a challenging backdrop this year, we believe it is possible that housing-related activity may improve, albeit off a depressed base.