EIRCOM MOST LIKELY BORROWER IN WORLD TO DEFAULT ON DEBTS - Eircom is the riskiest large-scale borrower in the world, according to bond market data. Prices in the credit default swap (CDS) market show that Eircom is considered most likely to default on its debt of any name in the CDS market. The Irish Independent says that investors think Eircom is more likely to default than Greece, according to the market prices. Despite the risk of being hit with losses, bond traders say even some of the riskiest Eircom debt is still being traded. The cost of insuring Eircom's corporate bonds debt increased by 8.46% last week and is now the highest in the world of any big corporation or country. In theory, the mismatch between the amount of cash Eircom takes in through sales and the amount it owes is so bad it should be allowed to walk away from a proportion of debt. Under UK or Irish law, Eircom could be able to walk away from up to €1 billion of its debt if that means the remaining assets can be saved - that's if the least at-risk lenders think a deal is acceptable. But debt markets sources told the Independent that even more vulnerable bonds were still being traded - some for as much as 30 cent.
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SHANNON LNG WARNS ON TARIFF CHANGES - The Irish Times says accumulated losses at the company seeking to build a €600m liquefied natural gas import terminal in Co Kerry stood at €29m at the end of last year.
The paper says this is shown in accounts filed recently by Shannon LNG Ltd and forms part of its €40m-plus investment in the project to date.
But the paper quotes a spokesman for Shannon LNG as warning that changes in the tariff structure proposed by the Commission for Energy Regulation for importing gas through Bord Gais-owned interconnectors from the UK “threatens the commercial viability of the development”.
The project for a 257-acre site at Ballylongford in Co Kerry was announced in 2006 and permission obtained in 2008. It will create about 100 jobs.
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US TAX AUTHORITIES TARGET BANK DEALS - US tax authorities are targeting cross-border finance deals worth billions of dollars between leading US and UK banks as they step up efforts to clamp down on abusive tax avoidance, a joint investigation by the Financial Times and ProPublica, the not-for-profit news organisation, has found. Four US banks - BB&T, Bank of New York Mellon, Sovereign (now part of Santander of Spain), and Wells Fargo - are in turn suing the US government over more than $1 billion in tax credits that the Internal Revenue Service has disallowed over the past decade. Washington Mutual has settled a similar dispute and Wachovia is pursuing an administrative complaint over a deal. The UK's Barclays emerges as a pivotal promoter of the complex cross-border deals, which the IRS claims were designed to generate artificial foreign tax credits. The Financial Times says the cases have become a crucial early battleground between the US and multinational banks and companies in the wider debate over so-called tax arbitrage, and whether companies exploit gaps between international tax systems to benefit their bottom lines. Foreign tax credits are intended to prevent taxpayers from being taxed twice. Some of the deals now cited by the IRS involve a single payment of tax by a company in one country, yielding credit and benefits for two taxpaying companies in two countries.
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UK WATCHDOG CRACKS DOWN ON MISLEADING CLAIMS OVER BROADBAND SPEEDS - The UK advertising regulator will this week order broadband providers to give customers a more accurate picture of the internet speeds they can receive, says the London Independent. After an eight-month investigation, the Advertising Standards Authority (ASA) said it would allow broadband suppliers to advertise speed claims only if 10% of customers could actually receive that level of service. It called the move a "significant tightening" of its existing policy and said it had taken the steps to ensure adverts "do not mislead, including by the omission of important information". It is understood that the ASA could release its full conclusions as early as tomorrow after circulating the preliminary results of the consultation to the industry. The findings follow criticism from the telecoms watchdog Ofcom about the difference between the speeds internet firms advertise and those they can actually provide. The Ofcom chief executive, Ed Richards, said earlier this year: "We would like to see clearer information provided to consumers which more accurately reflects the likely speeds they will actually receive."
