24/7 Wall St. » IRL

Bracing For The Euro Without Greece… Other PIIGS Too (EWG, EWQ, FXE, EWI, IRE, IRL, NBG, GREK, EWP, STD, BBVA, VGK, FEZ)

Administrator — Wed, 23 May 2012 16:20:17 +0000

So much for any great help from the ECB, France, Germany, and any other entity being able to help the Euro stay together. Rumors have been out that nations have been instructed to make contingency plans for what they will do if Greece does in fact leave the Euro. Make no mistake here. Greece IS leaving the Euro as it stands today. It is a question of when and how. It would take a miracle to make the Greek issue go away even if a solution comes up again. After all, didn’t they just make an agreement to stay in good graces with debt swaps and austerity earlier this year? Greece could get booted out now, or they could leave via electoral action. The return of the Drachma is coming and Europe has to deal with the fallout.

The financial damage is massive and the question boils down to how far the contagion can spread throughout Europe (and elsewhere). Austerity measures throughout Europe are now backfiring. France put in Hollande as a move back to the left as Sarkozy’s austerity measures were just going to be too great for the population to want. Inflation before cutbacks! Live well today, let the kids figure it out when hey get older! Hell, even The Netherlands could not agree on a budget and they have their act together financially just about as well as any of the top nations. Angela Merkel’s party suffered a regional election loss in recent weeks as well.

Greece will not likely be the only casualty here. Portugal, Spain, and Ireland are all at risk. Sinn Fein has been making policy statements about austerity and the Euro inclusion and went as far as issuing a video to call for a NO vote in the Austerity Treaty referendum. Spain has a serious capital shortfall in its banks if the reports over the size of the property value losses versus face value of loans is even only one-third true. Portugal is just totally irrelevant to Europe, but it is upside down and at risk. And Italy is just simply “too big to bail” with its debt and spending issues that lie ahead.

The fallout is running top to bottom… safe havens to PIIGS… We are seeing all the new 52-week lows come into play in some positions while many others are still above those recent lows.

iShares MSCI Germany Index (AMEX: EWG) is down 2.2% at $19.87 against a 52-week low $16.96; iShares MSCI France Index (AMEX: EWQ) is down 2.4% at $18.61 against a 52-week low of $17.88. The there is “the Euro currency ETF” via the CurrencyShares Euro Trust (AMEX: FXE) with a drop of 0.9% at $125.03 (new 52-week low) as the Euro is at the lowest point since July 2010. iShares MSCI Italy Index (AMEX: EWI) is down 3.8% at $10.26 and only one-penny above the $10.25 52-week low.

Ireland… The Bank of Ireland (NYSE: IRE) is down 2% at $4.90 against a 52-week low of $3.99. The New Ireland Fund, Inc. (NYSE: IRL) is down 1.1% at $7.79 against a 52-week low of $6.49.

Greece… National Bank of Greece SA (NYSE: NBG) is flat at $1.52 against a 52-week low of $1.45; Global X FTSE Greece 20 ETF (AMEX: GREK) is down 3.5% at $9.99 at a new 52-week low (prior $10.25 low). The election in mid-June will likely be the key determining factor here. If not, the situation is still not over and Greece is going to be an ongoing flight risk.

Spain… iShares MSCI Spain Index (AMEX: EWP) is down 3.3% at $22.81 and under the prior 52-week low of $22.87. Banco Santander, S.A. (NYSE: STD) is down 3.5% at $5.58 against a 52-week low of $5.52 and Banco Bilbao Vizcaya Argentaria, S.A. (NYSE: BBVA) is down 4% at $6.02 against a 52-week low of $5.96.

Vanguard MSCI Europe ETF (AMEX: VGK) tracks the MSCI Europe Index, which is made up of approximately 460 common stocks of companies located in 16 European countries-mostly companies in the United Kingdom, France, Switzerland, and Germany. It is down 2.6% at $39.85 against a 52-week low of $38.40. The SPDR EURO STOXX 50 (AMEX: FEZ) tracks the STOXX Europe 50 Index and it is down 2.9% at $26.93 against a 52-week low of $26.10.

This is sort of funny on the surface if you don’t think about the financial and human tragedy that is unfolding. It is not exactly as though the global economy rose this much when they launched the Euro. Little reward, massive pain!

Sadly, Europe is starting to feel like Latin America of the 1980s and early 1990s all over again.

JON C. OGG

Filed under: ADR, Banking, Bankruptcy, Compensation, Corporate Governance, Currency, ETF, International Markets, Mutual Funds, Personal Finance Tagged: BBVA, EWG, EWI, EWP, EWQ, FEZ, FXE, GREK, IRE, IRL, NBG, STD, VGK

Fitch Joins E.U. Downgrade Waves (EWK, IRE, EIRL, IRL, EWI, TI, EWP, STD)

Administrator — Fri, 27 Jan 2012 18:30:03 +0000

Fitch has joined in on the European sovereign credit rating downgrades. First it was S&P, but we might argue that this should have mostly been factored in already. Is it a secret that the economies in Europe have been slowing and have more exposure these days? Fitch is cutting six Eurozone sovereign ratings (on Rating Watch Negative since 16 December 2011) as follows (with ETFs and major ADRs indicated):

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

Filed under: 24/7 Wall St. Wire, ADR, Economy, Emerging Markets, ETF, International Markets, Mutual Funds Tagged: EIRL, EWI, EWK, EWP, IRE, IRL, STD, TI

Another Moody’s Debt Downgrade of Ireland, With Negative Outlook (IRL, AIB, IRE)

Administrator — Tue, 12 Jul 2011 19:41:12 +0000

As if the PIIGS needed any more bad news, Moody’s has just downgraded Ireland yet again. Like you wouldn’t have known about this. This pertains to its foreign and local-currency government bond ratings. The cut is only one notch, but this moves it into official junk at Ba1 from a prior Baa3. And as you might guess, the Moody’s outlook remains negative. Another cut was delivered in the form of a short-term issuer rating to non-Prime.

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

Filed under: ADR, Analyst Calls, Bonds, Economy, ETF Tagged: AIB, IRE, IRL

D-Day for PIIGS ADRs (TI, EWI, PT, IRL, AIB, IRE, NBG, EWP, STD, BBVA, SNF)

Administrator — Mon, 11 Jul 2011 15:08:20 +0000

If you are surprised about the newest crash scenario boiling up outside of Greece, this is something we have been covering routinely. While the beastly pace is surprising, how big of a surprise is this? Greece has its default issues well-known, and Italy is coming more and more into light as it is the least discussed member of the PIIGS. Portugal, Ireland, and Spain are all well-known to be suffering from variations of the same woes in Greece.

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

Filed under: ADR, Banking, Bankruptcy, Economy, Editor's Picks, ETF, International Markets, Mutual Funds, The Day, Trading Alert Tagged: AIB, BBVA, EWI, EWP, IRE, IRL, NBG, PT, SNF, STD, TI

Irish Bailout Redux: Beware Bankers Bearing Gifts (AIB, IRE, IRL)

Administrator — Thu, 31 Mar 2011 21:17:16 +0000

It was just yesterday that we warned about mergers in the banks “Irish Style.” The fear is that Allied Irish Banks plc (NYSE: AIB) and Bank of Ireland (NYSE: IRE) would be gobbled up by the Irish government or by European creditors in a merger that would have awful consequences for shareholders and creditors alike. The Irish stress tests came out Thursday and it looks as though Ireland is in the hole for another $24 billion for Allied Irish, Bank of Ireland, and the remaining wards of the state that has to be raised.

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

Filed under: ADR, Banking, Financial Stocks, Regulation Tagged: AIB, IRE, IRL

St. Patrick’s Day Stock Portfolio (AIB, IRE, IRL, RYAAY, ELN, WCRX, SAM, TAP, BUD, MO)

Administrator — Thu, 17 Mar 2011 13:29:47 +0000

Kiss me, I’m Irish! That is what you’ll be hearing a lot of after work if you go out for the St. Patrick’s Day festivities after work (or during work) today. We wanted to take a look to see how the Irish stocks are doing, as well as a few of the non-Irish stocks that may just get wrapped up in the celebration theme as well. So far it looks like the Japan-themed rally is giving the Irish and just about everyone else a boost. At 1:12 PM local time in Dublin, the Irish Stock Exchange’s ISEQ Overall index is up 50.43 points at 2,763.43. We are taking a look at the Irish ADRs and funds that would be exposed to Ireland here in the U.S. today.

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

Filed under: ADR, Entertainment, International Markets Tagged: AIB, BUD, ELN, IRE, IRL, MO, RYAAY, SAM, TAP, WCRX

Austerity Vote Creates All Green in Irish Stocks (AIB, IRE, IRL, RYAAY, ELN, WCRX)

Administrator — Tue, 07 Dec 2010 14:34:38 +0000

Allied Irish Banks plc (NYSE: AIB) and The Bank of Ireland (NYSE: IRE) are soaring on ahead of an expected approval vote for the Irish budget full of austerity measures and full of spending cuts.

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

Filed under: ADR, Banking, Currency, Economy, ETF, International Markets, Politics Tagged: AIB, ELN, IRE, IRL, RYAAY, WCRX

Irish Bank Debt Holders Now Risk Other Bank Rescues (IRL, AIB, IRE)

Administrator — Tue, 23 Nov 2010 14:58:59 +0000

The situation in Ireland feels like it keeps getting worse, even if it is supposed to be getting better. Anglo Irish Bank has already been nationalized during the financial meltdown but a group of its junior debt holders have vowed to oppose the Irish government offer that would pay them about 20% of face value. The holders will receive Irish debt in return, but apparently only if they approve the deal on the table. There is also a large battle over the proposed government budget as austerity measures are broad and harsh. In a broader sense of Irish stocks, The New Ireland Fund, Inc. (NYSE: IRL) is holding up better than the public ADR shares of the Irish banks are holding up.

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

Filed under: ADR, Banking, Bankruptcy, International Markets Tagged: AIB, IRE, IRL

Ireland, E.U., IMF, Bailout Dusts Banks (IRE, AIB, RBS, LYG, IRL)

Administrator — Mon, 22 Nov 2010 13:44:08 +0000

Ireland may be on the road to salvation after an E.U. and IMF bailout and that may be lending further support to the Euro. Just don’t look for the love to be put into Ireland’s two key ADRs of its US-traded banks. The Bank of Ireland (NYSE: IRE) and Allied Irish Banks plc (NYSE: AIB) are getting smacked right on the chin in this bailout.

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

Filed under: ADR, Banking, Bankruptcy, Economy, Financial Stocks, International Markets Tagged: AIB, IRE, IRL, LYG, RBS

What Saving Ireland Looks Like (AIB, IRE, IRL, NBG)

Administrator — Thu, 18 Nov 2010 20:32:58 +0000

Want to see just how much the saving of Ireland added to the key ADRs today? Look no further than Allied Irish Banks plc (NYSE: AIB), The Bank of Ireland (NYSE: IRE), and The New Ireland Fund, Inc. (NYSE: IRL):

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

Filed under: ADR, Banking, Economy, International Markets, Politics Tagged: AIB, IRE, IRL, NBG