PROBABLE PROMISSORY NOTE DEAL ''AS GOOD AS WE CAN GET NOW'' - Legislation to facilitate a potential deal on Ireland's promissory notes passed through the Dáil and the Seanad both of which sat overnight. The legislation will liquidate the Irish Bank Resolution Corporation, which was formerly known as the Anglo Irish Bank, and seeks to replace the promissory notes with a bond. Finance Minister Michael Noonan said the legislation was needed to protect taxpayers from vested interests, after news of plans to liquidate the IBRC became public.
The probable deal on the IBRC promissory notes has been welcomed as a positive development by members of the business community here and overseas. Peter Brown, the founder of the Institute of Financial Trading, says it was never realistic that we were going to get a writedown on our debt. "It was always going to be a case of extending the maturity profile and pay the interest only while the economy recovers," he says.
Ciarán O'Hagan, of Société Générale, said the probable deal was as good as we can get right now. "The Government can engineer itself into a better position if it was to need less cash for day to day spending," he says. He points to the concerns of the ECB on precedent setting for Portugal, Spain and Cyprus. However, he says there was an even bigger precedent set by Greece on the writing down of its debt last year.
Both men believe a deal would be regarded positively by the financial markets. "Our debt becomes more sustainable and there's a good chance we could get re-rated by the agencies," Peter Brown believes. "They'll look at servicing the debt over the longer period as much more positive than huge bullet repayments on the notes,' he added. Ciarán O'Hagan says there was time to see Ireland's credit rating improving. "However, the most important action is for the Government to continue to reduce deficit which is still the largest per capita in the OECD,' he states.
MORNING BRIEFS - European leaders will gather at a summit in Brussels to try to strike a deal on a budget for the EU for the next seven years. Spending is at the heart of those negotiations and there is an ideological divide between a number of nations. On one side, countries like the UK believe spending should be severely curtailed to match the austerity that is being implemented in many member states. On the other, there are countries like France who believe now is not the time for severe cutbacks in spending when money should be targeted at stimulating the European economy. French President Francois Hollande has already indicated that Paris is open to compromise.
*** Rupert Murdoch's News Corp has reported a more-than-doubling in profits for the final three months of 2012. Net income came in at £1.52 billion sterling mainly due to strong growth at its cable networks, which include Fox TV. New Corp also owns the Wall Street Journal and the Times newspapers in the UK. It closed the News of the World in 2011 following the UK phone hacking scandal. It spent nearly £36m on costs related to that scandal - just 2.5% of its profits. News Corp announced in June that it was separating its entertainment and publishing businesses..