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ISEQ recovers after Irish Life sale

Tuesday, February 19 17:35:49

The ISEQ rebounded this afternoon following the sale of Irish Life to Canada Life's parent, which helps Ireland's debt to GDP ratio.

By the close, the index was up 23.24 points to 3,689.09.

The sale of Irish Life to Canadian life insurer Great-West Lifeco will help push the government's debt below 120pc of GDP this year, Finance Minister Michael Noonan confirmed today.

Great-West Lifeco said it would buy Irish Life, formerly the insurance arm of bailed out Irish Life and Permanent, for E1.3bn and expected the transaction to close in July.

"A 1.3 billion euro cash injection would, combined with the Bank of Ireland Contingent Capital deal, and all other things being equal, reduce GGD (General Government Debt) to GDP from 121.3 percent at end 2013 to 119.9 percent," the Minister said in a statement.

Shares in Smurfit Kappa rose 5c to E11.50. Independent containerboard producer Hamburger (1.6m tonnes of testliner capacity) has announced a E40/tonne price increase to all testliner grades from 1 March. This is in addition to the E30-40/tonne increase which has already been secured in the market in February. The company notes that strong demand has resulted in a very good order book and a quick implementation is expected due to strong demand and a continuing decrease in testliner stocks. "With momentum on pricing gathering pace and strong cash flow generation allowing for further deleveraging of the balance sheet and/or increased cash returns, we favour Smurfit Kappa particularly given its undemanding valuation (5.5x EV/EBITDA versus 6x historical)," said Goodbody's Robert Eason.

The UK government has committed to zero carbon new homes from 2016. As part of this timetable an uplift to the current energy efficiency standards were supposed to be introduced this April (last change was 2010). However, according to press reports these could be delayed until Autumn. The delays are due to disagreements within the coalition on how strong the new efficiency rules should be and there are now some "fears that they may be watered down so far as to render them meaningless". Shares in Kingspan climbed 14c to E9.00.