Belgium LT IDR downgraded to ‘AA’ from ‘AA+’; Negative Outlook; ST IDR  affirmed at ‘F1+’: iShares MSCI Belgium Index Fund (NYSE: EWK) is still up 0.4% at $11.33; 52-week range $10.23 to $15.65.

Ireland LT IDR affirmed at ‘BBB+’; Negative Outlook; ST IDR affirmed at ‘F2′:  Bank of Ireland (NYSE: IRE) down 1.6% at $6.15; 52-week range of $3.99 to $27.00 (adjusted for reverse split). MSCI Ireland Capped Investable (NYSE: EIRL) is down 1.5% at $20.17; 52-week range is $16.78 to $23.80. The Irish Investment Fund, Inc. (NYSE: IRL) is still up almost 1% at $7.22 and its 52-week range is $6.49 to $8.77.

Italy LT IDR downgraded to ‘A-’ from ‘A+’; Negative Outlook; ST IDR downgraded to ‘F2′ from ‘F1′: iShares MSCI Italy Index Fund (NYSE: EWI) is down 0.8% at $12.92; 52-week range is $10.88 to $20.15. Telecom Italia S.P.A. (NYSE: TI) is flat at $10.33 an dthe 52-week range is $9.74 to $16.04.

Spain LT IDR downgraded ‘A’ from ‘AA-’; Negative Outlook; ST IDR downgraded to ‘F1′ from ‘F1+’: iShares MSCI Spain Index Fund (NYSE: EWP) is still up 0.4% at $31.44 against a 52-week range of $28.53 to $45.99. Banco Santander, S.A. (NYSE: STD) is still up 0.7% at $8.16 against a 52-week range of $6.77 to $12.72.

Two more downgrades were issued:

• Cyprus LT IDR downgraded to ‘BBB-’ from ‘BBB’; Negative Outlook; ST IDR affirmed at ‘F3′
• Slovenia LT IDR downgraded to ‘A’ from ‘AA-’; Negative Outlook; ST IDR downgraded to ‘F1′ from ‘F1+’

Should this have really been a surprise?  If so, these would be performing far worse.

JON C. OGG

While Moody’s did note that concerted efforts have been made, the overall path here is a red one.  The key driver is that Ireland is likely to need further rounds of official financing after the end of the E.U. and I.M.F. support packages end in 2013.  There is also the note that the private sector creditor participation in debt relief, i.e. haircuts.

Moody’s has said that the prospect of any private sector participation in debt relief is negative for holders of distressed sovereign debt.  In short, any help o relief is possibly a de facto credit event.

Also noted as risks are implementation to deficit reduction plans and a shift in tone of European Union governments toward how and under what conditions such aid may come. Here is how the three credit-sensitive Irish trades for U.S. investors are shaping up so far in funds and/or ADRs:

The New Ireland Fund, Inc. (NYSE: IRL) is down 0.5% at $8.06 and the 52-week range is $5.55 to $8.77.

Allied Irish Banks plc (NYSE: AIB) is down 1.7% at $1.72 and the 52-week range is $1.61 to $13.65.

Bank of Ireland (NYSE: IRE) is down 3.8% at $1.01 and the 52-week range is $1.00 to $4.86.  That new low was hit today.

Do not expect this to be last of the credit rating downgrades in Europe and particularly in the lands of the PIIGS.

JON C. OGG

Greece’s austerity measures are merely a delay for the inevitable by any count we can see.  When one falls, the dominoes take out the closest members as well.  That leaves Ireland, Portugal, Spain, and then Italy.  We could tell you again about the credit default swaps widening out with sovereign bond yields, but perhaps the best measurement today would be in the ADRs.  To put this in perspective: what you are seeing in the ADRs today from the lands of the PIIGS is equivalent to the DJIA being down somewhere in the vicinity of 400 to 600 points in one day alone.  Here are just some of the ADRs and funds for investors to review:

Telecom Italia SpA (NYSE: TI) is down 7.7% at $11.61 and the 52-week range is $10.46 to $16.04

iShares MSCI Italy Index (NYSE: EWI) is down 6.2% at $15.40 and its 52-week range is $13.21 to $20.15.

Portugal Telecom SGPS SA (NYSE: PT) is down 6.2% at $8.81 and the 52-week range is $8.80 to $15.24.  That low was hit today.

The New Ireland Fund, Inc. (NYSE: IRL) is actually holding up better than its peers so far this year.  The share price today is down 3.8% at $8.02 and the 52-week range is $5.55 to $8.77.

Allied Irish Banks plc (NYSE: AIB) is down 5% at $1.69 and the 52-week range is $1.61 to $13.65.

Bank of Ireland (NYSE: IRE) is down 4.7% at $1.01 and the 52-week range is $1.00 to $4.86.  That new low was hit today.

National Bank of Greece SA (NYSE: NBG) is down 6.1% at $1.22 and the 52-week range is $1.17 to $3.23.

iShares MSCI Spain Index (NYSE: EWP) is down 5% at $37.86 and the 52-week range is $33.82 to $45.99.

Telefonica, S.A. (NYSE: TEF) is down 5.1% and the 52-week range is $20.07 to $27.61.

Banco Santander, S.A. (NYSE: STD) is down 5.75% at $10.16 and the 52-week range is $9.43 to $13.75.

Banco Bilbao Vizcaya Argentaria, S.A. (NYSE: BBVA) is down 7% at $9.98 and the 52-week range is $8.94 to $14.28.

The Ibero-America Fund, Inc. (NYSE: SNF) is a small closed-end fund for Spain with about $67 million in assets, but it is actually in the process of approving the liquidation and dissolution of the fund and any new buyers are outside of the record date for that voting process.  This small fund is down 2.5% at $7.16 and the 52-week range is $5.54 to $7.77.

JON C. OGG

Where this money will come from is still an outstanding issue.  Maybe 24 billion Euros isn’t what it used to be, but this is still a massive sum.  What really hurt were comments today that more senior creditors in the capital structure would have to accept some haircuts as well.  This strikes at the heart of corporate governance and the laws which protect creditors and borrowers and it brings up direct fears from investors.  If a senior creditor can arbitrarily be wiped out with resolve, it spooks investors.

Is Ireland going to wipe out senior creditors or will they just continue to ask for concessions?  Unlikely.  Will senior creditors have to eat some bad bread?  Likely.  It seems that junior creditors will have to absorb more pain based upon the comments we saw today from regulators.  We will skim over the ramifications to keep this from becoming a doctoral thesis, but this is a part of what has led credit rating agencies to downgrade and warn of downgrades in the lands of the PIIGS in Greece, Spain, and Portugal.  Who really owns the assets ahead in the line of creditors?  Is it senior creditors or is it the latest agency willing to lend money regardless of the country of domicile?  Back to the banks in Ireland.

These funds have to come from somewhere.  No government entity wants these Irish banks on their books regardless of domicile.  Personally, it is hard to imagine that anyone regardless of who they are which would admit a formal dollar figure of how deep these black holes are.  So, who will step up?  Ireland, Greece, the IMF, the ECB, special EU branches?  Maybe all of them, maybe none of them.

If you think that these fears are without merit, look at how the stocks performed.  Allied Irish Banks plc (NYSE: AIB) closed down 6.6% at $2.40 and Bank of Ireland (NYSE: IRE) looks as though it did not reopen.

Our biggest concern is continuity of the equity value of these banking wards of the state.  Imagine a whole nation full of West Coast banks from the late 1980′s and early 1990′s.

It is hard for us to really understand how The New Ireland Fund, Inc. (NYSE: IRL) trades versus its real assets.  Shares closed down 0.13% at $7.64 today. It is a closed-end fund and Lipper shows that it has a -14% discount to its net asset value.  What the real value is, well we will leave that to them.

Our big question has been how legitimate these stress tests really are.  These stress tests assumed in the reports we read that deposit outflows would not continue.  Is that a safe assumption? If these banks get to survive as equity entities, will there be any assurances that this is the final-final capital deficiency raise?  I am too skeptical to answer that with a straight face.  How many bailouts and how many rescue packages have we really seen?  It may not really be thirty-seven, but it sure feels like it.  I’d rather go hunting for four-leaf clovers in Arizona before believing that not a single penny more is needed to remedy this situation.

A warning to creditors and citizens of a country that has always been enjoyed by yours truly… “Beware Bankers Bearing Gifts.”

JON C. OGG

Allied Irish Banks plc (NYSE: AIB) is up 2% at $2.98 and the Bank of Ireland (NYSE: IRE) is up 2.5% at $2.00.

The New Ireland Fund, Inc. (NYSE: IRL) closed at $6.99 on Wednesday and we have yet to see formal trading indications in the pre-market.

Ryanair Holdings plc (NASDAQ: RYAAY) is up 2.9% at $27.37.

Elan Corp. PLC (NYSE: ELN) is up 1.6% at $6.33.  Warner Chilcott plc (NASDAQ: WCRX) has yet to show formal trading indications in the pre-market trading.

Boston Beer Co. Inc. (NYSE: SAM) and Molson Coors Brewing Company (NYSE: TAP) are both Irish for a day… shares have not traded pre-market but are indicated higher.  Anheuser-Busch InBev (NYSE: BUD) is up 2.15% at $55.07 in pre-market trading.

Altria Group Inc. (NYSE: MO) is up 1.2% at $24.59.  If people are drinking more today, chances are that they are smoking more and probably bringing in a few non-smokers as well.  It’s just a day thing!

Happy St. Patrick’s Day!

JON C. OGG

The majority vote is expected, but it is still going to be a close call.  If approved, Ireland will be able to access a rescue package set at 85 billion euros, or almost $113 billion.  The package was put together by the European Union and by the International Monetary Fund.

The New Ireland Fund, Inc. (NYSE: IRL) has not yet traded but it closed at $6.59 and it has a 52-week range of $5.55 to $7.91.

Allied Irish Banks plc (NYSE: AIB) is up 14% at $1.19 and the Bank of Ireland is up 17% at $2.53.

Ryanair Holdings plc (NASDAQ: RYAAY) is up 1.8% at $31.10, Elan Corporation plc (NYSE: ELN) is up 3.3% at $5.78, and Warner Chilcott plc (NASDAQ: WCRX) is up 4.1% at $20.75.

JON C. OGG

Allied Irish Banks plc (NYSE: AIB), which is not yet to be confused with Anglo Irish Bank, is already almost close to a government entity after its recapitalization and The Bank of Ireland (NYSE: IRE) is still afloat but not exactly in a solid position at all.  The new terms  of the E.U. and IMF bailout could  put further pressure on these remaining two.  The latter has recently tested a guaranteed debt offering and the coming stress tests (or fears of tests) remain a challenge.

Today’s action in the Irish banks shows just how difficult the situation is at the moment as shares rise and fall in the double-digit percentages almost each day.

Allied Irish Banks plc (NYSE: AIB) is down 14% at $0.95 and The Bank of Ireland (NYSE: IRE) is down a sharper 22% at $1.73.  The latter also hit a low of $1.59 this morning, and that is the new 52-week low.  The New Ireland Fund, Inc. (NYSE: IRL) is down only about 2.25% at $6.51 and volume is still very light.

The New York Times threw out a figure that Anglo Irish Bank could cost a sum of more than 34 billion euros, which comes to about 8,000 euros for each of Ireland’s 4.2 million people.  8,000 euros… that is probably more than the domestic annual budget of Guinness for most of its citizens.

JON C. OGG

Ireland’s finance ministers have said that the banks will need more capital, and they also said that a further shrinking of the operations and balance sheets will be needed.  At issue for the banks is that the new capital requirements are not yet set.  These new rules will be mandated after further stress tests are made.  This is beginning to feel like TARP 16 or Financial Groundhog Day.

Two non-Irish banks also find themselves in the mix here.  Royal Bank of Scotland Group PLC (NYSE: RBS) has close to $100 billion equivalent of Ireland exposure and Lloyds Banking Group PLC (NYSE: LYG) has closer to $50 billion equivalent in  loan exposure in Ireland.

Allied Irish Banks plc (NYSE: AIB) is down 11% at $1.09 and The Bank of Ireland (NYSE: IRE) is down 17.5% at $2.20.  Royal Bank of Scotland Group plc (NYSE: RBS) is down 4.5% at $12.79 and Lloyds Banking Group plc (NYSE: LYG) is down 4.7% at $4.07.

We are still waiting for trading in The New Ireland Fund, Inc. (NYSE: IRL).

JON C. OGG

• AIB $1.29  Up $0.21  (+19.44%)
• IRE $2.85  Up $0.69  (+31.94%)
• IRL $6.75  Up $0.27  (4.23%)

We heard late in the morning that Ireland’s sovereign bond spreads came in by as much as 300 basis points.  Not bad, not bad at all.
National Bank of Greece SA (NBG) is far from “Irish” but it is deemed as a secondary or tertiary winner as well.  If you’ll save one, you’ll save another.

JON C. OGG

We are so far seeing a mixed reaction in the Irish bank trading in ADRs today.  The Bank of Ireland (NYSE: IRE) is down 3.9% at $2.22 and Allied Irish Banks plc (NYSE: AIB) is up 4.5% at $1.15.  Perhaps the thought is that things might be worse at the less-bad bank and less-bad at the lowest bank of the two.  The quote in local terms in Ireland shows Allied Irish Banks up closer to 2% and the Bank of Ireland shows that it is up 1.5%.  A fund for U.S. investors is The New Ireland Fund, Inc. (NYSE: IRL) and its gain of 35 to $6.52 is taking it off of yesterday’s lows.  Its 52-week range is $5.55 to $7.91 and it trades only about 25,000 shares a day.

This is likely yet one more aim to prevent the focus on the PIIGS spreading like wildfire to Greece, Portugal, and Spain.  There is a real risk here that is impossible to ignore even if this formal inspection is the right thing to do.  The problem is no different than the joke about grandma and grandpa walking bare through the house at Christmas; the family is suddenly not too happy about where they came from.

Ireland is in the midst of major austerity cuts and officials from Ireland and the E.U are trying to stabilize the Irish banks.  The goal, outside of saving everyone and putting huge pressure on the E.U. and particularly the PIIGS, is to restore Eurozone confidence.  While The United Kingdom is not a part of the Euro, the Brits have offered help as well.  Ireland has maintained that it does not want a bailout.  The country seems leery of the IMF aid because the constraints that can be attached.

Peeling onions usually leads to crying.  There is a good chance that we’ll get to know very soon just how strong the onions are in Ireland.  Unfortunately, potato analogies are too hard to come by.

JON C. OGG