Monday 20th January 2014
Ireland’s five-year borrowing costs hit a record low after rating’s upgrade
Yields on five-year bonds fall 17 basis points to 1.62%, lower than equivalent US bonds
Moody’s upgrading of Ireland’s credit rating by one notch to Baa3 on Friday, the lowest investment grade, meant investors previously restricted from buying junk-rated debt were once again able buy Irish bonds.
The State’s five-year borrowing costs fell to a record 92-year low today on the back of Moody’s decision to restore Ireland’s credit rating to investment grade.
Yields on five-year Irish bonds dropped 17 basis points to 1.621% at one stage, lower than equivalent US yields, as investors anticipated further upgrades in the coming months.
Yields on benchmark 10-year Irish bonds fell 20 basis points to 3.24% close to an eight-year low.
Moody’s upgrading of Ireland’s credit rating by one notch to Baa3 on Friday, the lowest investment grade, meant investors previously restricted from buying junk-rated debt were once again able to buy Irish bonds.
Yields on Irish debt have fallen steadily since mid-2011, at the height of the euro zone debt crisis, when five-year Irish yields topped 18%, and ten-year yields were 14 per cent.
Welcoming the positive market reaction, National Treasury Management Agency (NTMA) chief executive John Corrigan said the agency still had about €4 billion to raise this year, though the size of the individual auctions would be “modest”.
Mr Corrigan said he hoped Ireland may benefit from a further rating upgrade, possibly within 15-18 months if the Government stuck to its fiscal targets, and that Friday’s decision by Moody’s may bring interest in Irish bonds from Japan and the Far East.
He also indicated to RTÉ’s Morning Ireland programme that the agency intended to make an announcement regarding its auction plan for the year in a week or two.
Despite an EU-wide bond market rally today, which saw yields on German bunds fall to a six-week low, the premium investors require to hold Irish debt over German debt shrank to 152 basis points – its lowest level since early 2010 several months before the country was forced to seek an international bailout.
“Ireland has clearly turned a corner and you’re starting to see that reflected in the ratings,” said Allan von Mehren, the chief analyst at Danske Bank.
“We’re going to see a continued grind lower in yields in peripheral countries as investors look for places where they can get yield pick-up and as long as fundamentals are also improving,” he said.
Citigroup strategist Peter Goves said that the rating action came earlier than anticipated and goes beyond expectations. He said Irish bonds may now gravitate toward the “soft core” of euro zone more quickly than anticipated, and suggested another Moody’s upgrade later in 2014 was a possibility.
Standards and Poor’s and Fitch rate Irish debt three notches above junk at BBB+. S&P lifted its outlook to positive last year while Fitch, scheduled to give an update in a month’s time, has a stable outlook.
“Ratings agencies are catching up with reality,” said Chris Scicluna, head of economic research at Daiwa Capital Markets. “Yields are still closer to the periphery (than top-rated states) so you can’t argue the rally is excessive.”
“Bottom line, the Moody’s move on Ireland was overdue but is still an important confirmation of the market discount, and especially as the market is discounting more positive developments,” said Padhraic Garvey, global head of developed markets debt & rates strategy at ING Bank in Amsterdam.
Mr Garvey noted that ING’s own credit rating model pitches Ireland at BBB+, and thus suggests that Moody’s is “still behind the pace”.
The cost of insuring against an Irish default also fell today. Five-year credit default swaps broke below 100 basis point for the first time since 2008, to 93 basis points, according to Markit.
World’s 85 richest people own nearly half of the global wealth
A tiny elite like Warren Buffett (above right) comprising the richest 85 individuals hold wealth equivalent to that owned by the bottom half of the world’s population, a report says.
The report by worldwide development organisation Oxfam, titled ‘Working For the Few’, published ahead of the World Economic Forum meet in Davos, details the impact that widening inequality is having in both developed and developing nations.
“Wealthy elites have co-opted political power to rig the rules of the economic game. undermining democracy and creating a world where the 85 richest people own the wealth of half of the world’s population,” Oxfam claimed.
It further added that since the late 1970s, tax rates for the richest have fallen in 29 of the 30 countries for which data are available, meaning that in many places the rich not only get more money but also pay less tax on it.
As per the report, in the last 25 years wealth has become even more concentrated in the hands of fewer people so much that one per cent of the world’s families own almost half (46 per cent) of the world’s wealth.
Oxfam wants governments to take urgent action to reverse the trend. It is asking those attending the World Economic Forum (WEF) to make six-point personal pledge to tackle the problem.
“It is staggering that in the 21st Century, half of the world’s population own no more than a tiny elite whose numbers could all sit comfortably in a single train carriage,” ” Oxfam Executive Director Winnie Byanyima said.
The report alleged that the richest individuals and companies in the world hide trillions of dollars away from the tax man in a web of tax havens around the world. “It is estimated that $21 trillion is held unrecorded and off-shore,” it said.
The report further added that in India, the number of billionaires increased tenfold in the past decade, aided by a highly regressive tax structure and the wealthy exploiting their government connections, while spending on the poorest remains remarkably low.
Moreover, seven out of ten people live in countries where economic inequality has increased in the last 30 years. Besides, the richest one per cent increased their share of income in 24 out of 26 countries for which we have data between 1980 and 2012.
The richest one per cent increased their share of income in 24 out of 26 countries for which we have data between 1980 and 2012.
Budget supermarkets Lidl and Aldi now more popular with shoppers than any other chain
More and more punters in Ireland are flocking to the cut-price stores
Cut-price grocery stores Lidl and Aldi are now more popular with shoppers than any other chain.
A Behaviour & Attitudes survey for Checkout Magazine found 62% of consumers have shopped in one or both in the past year, compared to 48% in Tesco, 41% in SuperValu and 36% in Dunnes.
When it came to choosing a store for the “main shop”, Lidl and Aldi again came out on top with 30% – an increase of 21% on the previous year.
That’s compared to 20% who choose Tesco for their big shop, 19% who opt for Dunnes and another19% who prefer Super Valu.
Checkout editor Stephen Wynne-Jones cited the survey as proof the discount stores have become part of the shopping landscape here.
He said: “These figures illustrate what many in the industry have believed for some time, the discounters have ‘entered the mainstream’ in the eyes of Irish shoppers.
“As the economic clouds start to recede, it will be interesting to see whether the significant growth enjoyed by both Aldi and Lidl can be sustained.”
Of those surveyed, 92% said they have a Lidl in their local area while 86% have an Aldi, illustrating how the retailers have spread their reach nationwide.
The study also discovered the overall weekly grocery spend has seen its first increase in six years, with weekly spend up by 6%, bringing grocery bills back to 2010 levels.
In terms of the supermarkets that have gained most from this increase, Dunnes Stores has seen a 12% rise since last year.
Last November, Tesco began what many dubbed a price-war as they looked to ways of combating the loss of their customers to the likes of Aldi and Lidl.
The Tesco “price promise” allows customers to compare products they bring to the till with similar products available in the German stores.
If the Tesco product is more expensive, customers will receive a voucher for the difference. The offer applies to 1,400 products in the store.
However, the scheme was well received by Aldi, who issued a statement welcoming the “admission by Tesco that it is more expensive”.
Heartfelt appeal for return of watches given by dying father to his sons
Two watches (LIKE ABOVE) to be given to sons when they reached 21 were stolen in Co Louth last week
Thieves who stole engraved watches left by a dying father in Co Louth to his two young sons have been asked to “to give them back”.
They were specially engraved by Stephen Carroll (38) for his sons the week before he died in November.
“They are the only tangible gift Stephen left for his eldest sons and they are just heart-broken that they have been stolen,” said Mr Carroll’s sister-in-law Kerrie Carroll.
The Omega watches have little or no monetary value, according to his family.
His family has appealed to the thieves to “give them back.
Drop them to a church, to the Gardai or leave them somewhere they will be found but just give them back. There will be no questions asked.”
Mr Carroll and his wife Breffnie (39) have three sons, Senan (10), Keelan (8) and Roan (4) . The watches were given to Mr Carroll for his 21st and 30th birthdays.
According to his sister-in-law when Mr Carroll diagnosed with kidney cancer 18 months, he spent a lot of time thinking about special momentos to leave for his beloved children.
“He wanted to leave something for the boys to have and they were to each be given a watch when they too reach 21,” explained Kerrie.
Mr Carroll died last November but “lived long enough to see the engraving. It was what he wanted. He wanted to have the engraving done and he thought a long time about it” said Kerrie.
Mr Carroll and his family run the well known Carroll newsagents and Hallmark shops in Dundalk, Drogheda,Monaghan and Navan.
Mr Carroll is from Blackrock, Co Louth and the watches were being kept by his parents Ian and Anita in their family home in Blackrock.
They were away from the house and last Friday thieves forced their way in.
“We are all devastated that this has happened. The watches have no resale value at all because of the unique engravings on them. To us they have sentimental value that we could not put a price on. This is very hard on all of the family especially coming so soon after Stephen’s death,” added Kerrie.
One watch is an Omega Constellation model which is engraved on the back with “To Keelan love Daddy x” while the other is an Omega Seamaster and is engraved “To Senan love Daddy x”.
She said: “We are hoping that someone, somewhere has a conscience and returns these watches to an utterly devastated family. These were the only tangible memories we have of him.”
The family is using the media, to highlight details of the watches in case they are offered for sale.
Gardai in Blackrock are investigating the theft.
Can socially engaging meals help Irish elderly people?
A new Irish study is planning to investigate the importance of nutritious and socially engaging meals among older people.
Researchers at Trinity College Dublin are appealing for volunteers to take part in the study, which aims to see whether such meals could help to fight age-related problems in cognition, frailty and overall quality of life. They will do this by tackling the two areas of malnutrition and social isolation.
According to the researchers, many older people in Ireland who live independently are at risk of malnutrition. This refers to under-nutrition that affects a person’s health and wellbeing. It can come about if the body cannot use food properly, which can lead to a person losing weight and developing nutritional deficiencies. Certain diseases can also lead to appetite suppression.
Across the EU, including in Ireland, an estimated 5-15% of older adults are already affected. Malnutrition can lead to frailty and impaired cognition, such as memory problems. Cognition is also essential for physical health and social wellbeing.
Meanwhile, another major risk for older adults is social isolation. This can come about as a result of frailty, illness or bereavement.
According to the researchers from Trinity’s NEIL (Neuro-Enhancement for Independent Lives) Programme, isolation and loneliness are as bad for a person as obesity and smoking. They are associated with an increased risk of depression, frailty, sleep problems and dying.
Figures suggest that around 6% of Irish adults over the age of 60 are at risk of social isolation.
This new study aims to tackle the two issues of malnutrition and social isolation. It aims to tap into the 20% of older adults in Ireland who actively volunteer in their communities, to deliver and evaluate a mealtime intervention to older people who are socially isolated.
The intervention will emphaise the social element of the meal as much as the nutritious element. The volunteers will provide nutritional advice, but will also spend time with the isolated people, planning and cooking the meal together and then eating it together as well.
The two-year RelAte study wants to assess whether nutritious and socially engaging meals can mitigate against age-related decline and help people maintain their independence for longer.
The study requires two types of volunteer:
-50 people over the age of 55, who would like to be trained as a NEIL volunteer. They will be expected to deliver the mealtime intervention
-100 socially isolated people over the age of 60 who are currently living alone.
“Physical health, mental health, and engagement with life are the three core aspects of healthy ageing and independent living. We hope the two-year RelAte study will show that social interaction and good nutrition can impact positively on quality of life, frailty and cognitive function,” explained principal investigator, Dr Sabina Brennan.
Almost commenting on the study, Prof Brian Lawlor of Trinity College, emphasised that the provision of home-based support for the ageing population ‘is an economic necessity of both national and international priority.’
“At an individual level, home-based care provides individuals with the independence they require to maintain their health, activities and sense of identity in their own home. The RelAte project has far-reaching implications for home-based support and for maintenance of independence into late life, both at a national and an international level,” he said.
Size of Bumblebees reduced by common pesticides,
Bee Health Experts Warn us
A study by Royal Holloway University of London reports that exposure to a commonly used pesticide causes stunted growth in bumblebees.
When exposed to the pesticide pyrethroid, which is used on flowering crops to prevent insect damage, the bumblebees, which are pollinators of flowering plants, grow less and go on to produce young that hatch in smaller sizes, the researchers said.
The investigation was done over a four-month period, where researchers recorded the size of the bees, weighing them on micro-scales and monitoring the size of queens and and male drones produced by the colony.
“We already know that larger bumblebees are more effective at foraging,” said researcher Gemma Baron. “Our result, revealing that this pesticide causes bees to hatch out at a smaller size, is of concern as the size of workers produced in the field is likely to be a key component of colony success, with smaller bees being less efficient at collecting nectar and pollen from flowers.”
Baron and her colleagues report that the research was the first to be carried out on pyrethroid pesticides across the entire lifecycle of bumblebees.
“Bumblebees are essential to our food chain so it’s critical we understand how wild bees might be impacted by the chemicals we are putting into the environment. We know we have to protect plants from insect damage but we need to find a balance and ensure we are not harming our bees in the process,” said Mark Brown, a professor at Royal Holloway who was involved in the study.
The researchers contend that in light of their results there will likely be further bans on pyrethroid pesticides throughout the European Union, where there is already a moratorium on the use of three neonicotinoid pesticides, which have been linked to colony collapse disorder.
“Our work provides a significant step forward in understanding the detrimental impact of pesticides other than neonicotinoids on wild bees,” Nigel Raine, an expert on bee health.
“Further studies using colonies placed in the field are essential to understand the full impacts, and conducting such studies needs to be a priority for scientists and governments,” he said.