Friday 17th January 2014
Ireland regains investment grade rating from Moody’s
Agency upgrades rating by notch to Baa3 in a major post-bailout boost for the Government
The credit rating of the Irish Government has been raised to investment grade by Moody’s the most influential of the international credit rating agencies.
In a statement tonight, Moody’s said that it was upgrading Ireland’s credit rating by one notch to Baa3, the lowest investment grade.
Prior to the financial crisis Ireland held a AAA or “triple A” rating. The highest possible.
New York-headquartered Moody’s also changed the outlook for Ireland’s credit rating from stable to positive, holding out the prospects of a further upward re-rating later in the year.
Moody’s said the reasons for the upgrade were the growth potential of the economy and the Government’s exit from the EU-IMF bailout.
“The first driver of the upgrade is the recent acceleration of economic growth, which indicates an increased likelihood of securing the sustained long-term growth needed to achieve a turnaround in Ireland’s public finances. A key positive signal is the faster pace of employment creation, with the unemployment rate having dropped 2.7 percentage points from its Q2 2012 peak, despite a rise in the participation rate,” it said in a statement tonight.
It also noted the Government’s ability to exit the bailout without a precautionary credit line, which it said “reflects that the government’s reform agenda stayed largely on track throughout the programme, despite weaker than expected domestic and external economic conditions”.
It said that it expects Ireland will hit its target of reducing its exchequer deficit to below 3 per cent of economic output by 2015. Other factors included the regaining of market confidence through the restructuring of the banking system. “As a consequence, our baseline expectation is that the government will need to provide very little, if any, of the capital that the Irish banks may need following the upcoming EU-wide stress tests, consistent with its Baa3 rating.” it said.
The only sour note was struck over the slow pace of the clean-up of the banking system . Moody’s warned that the pressure being brought to bear on the banks by the Central Bank is “ likely to increase foreclosures, impairing profitability and potentially dampening the housing market recovery”.
The positive outlook was attributed to an expectation of a sustained recovery in the Irish economy and signs of stronger growth coming through from the rest of Europe. If the economy grows rapidly enough to put Ireland’s debt to GDP ration “on a firm downward path”, then a further upgrade is likely.
“Downward pressure would develop… should the country’s fiscal consolidation process falter,” pushing the debt ratio significantly above its current level of roughly 100 per cent.
Moody’s is the last of the main credit rating agencies to give Ireland an investment grade. All three – including Standard & Poor’s and Fitch – had cut Ireland to sub-investment or “junk” status in the aftermath of the 2010 financial bailout from the IMF and EU.
The re-rating by Moody’s clears the way for more conservative investors, particularly in the Middle and Far East, to buy Irish Government debt. Many of these funds are precluded from investing in Government debt if it does not have an investment grade rating from all three of the big credit rating agencies.
Speaking earlier yesterday at the launch of a new $100 million joint-venture investment fund between Ireland and China, Mr Noonan said: “A lot of Asian funds would like to invest in Irish government bonds, but they need all the ratings agencies to have Ireland at investment grade first. But I have no doubt that, before too long, there will be funds flowing from China to the Irish sovereign.”
The yields on Irish bonds – a measure of investor appetite – have fallen steadily since it became clear late last year that Ireland would successfully exit its the bailout. The yield on the benchmark 10-year bond was 3.17per cent at the close of trading last night. The impact of the Moody’s re-rating will not be clear until markets reopen again on Monday.
The National Treasury Management Agency – which raises and manages debt for the Government – raised €3.75 billion last week in its first foray into debt markets since Ireland exited the bailout on December 15th. The NTMA is not expected to look to raise more debt in the short term.
“I am pleased to note that one of the main drivers for today’s upgrade was Ireland’s restored market access,’’ the NTMA chief executive John Corrigan said last night. “The change to the ratings outlook represents a positive context for future rating reviews.”
Moody’s also upgraded the debt ratings of the National Asset Management Agency, whose debt is guaranteed by the Government, to investment grade and its outlook to positive.
Irish economy will be a Euro star performer says Goodbody
Ireland will be among the top performing economies in the eurozone in 2014, Goodbody has forecast as the stockbroker raised growth forecasts for the year.
Goodbody’s upbeat assessment of the economy says 2014 will be a landmark year as the Budget returns to a primary balance for the first time since the crisis began.
It is projecting gross domestic product to grow 2.6pc, strengthening in 2015 to 3.2pc.
This is more ambitious than the Government’s own projections and is similar to those put forward by the Economic and Social Research Institute (ESRI).
Goodbody economist Dermot O’Learysaid Irish GDP data was failing to capture some of the most encouraging trends in the economy since before the crisis.
“The phrase ‘the devil is in the detail’ is particularly apt when looking at indicators of the health of the Irish economy,” Mr O’Leary said.
“A casual glance at GDP growth data over recent years would suggest that the economy, after a sharp contraction in the 2008-2010 period, recovered in 2011 and faltered again over the 2012/2013 period.
“This does not tell the full story. It is true to say that Ireland’s recovery is slow and protracted, but the GDP data hide some more encouraging trends in 2013.”
Mr O’Leary said a broad- based recovery in investment is taking place in the domestic economy.
He said that excluding the aircraft sector, which contracted last year, investment grew by 17pc year-on-year in the third quarter of 2013 — its fastest pace on record, albeit from very low levels.
Construction investment is also expected to grow strongly over the coming years on the back of rising prices and supply shortages in the greater Dublinarea in particular, Goodbody said.
The company forecasts that, at 2.6pc, Ireland will be the third-fastest growing economy in the euro area, behind Latvia at 4.1pc and Estonia at 3pc.
Irish charity regulatory board will be set up by Easter?
says Alan Shatter
All registered charities will have to provide reports to the authority each year on their activities.
The board of a new Charities Regulatory Authority will be in place before Easter, Justice Minister Alan Shatter said today.
The Minister for Justice and Equality said this evening that he will issue a call next week for expressions of interest from suitably qualified persons who wish to be considered for appointment to the board of a new Charities Regulatory Authority.
He said this will be taking place with a view to making appointments before Easter to allow the authority to come into operation at that time.
This announcement followed a comment from Minister for Health James Reilly today that a charities regulator will be appointed by October/November 2014.
Shatter said that arrangements are also being made to fill the post of CEO of the new authority on an interim basis by the end of February this year.
He made reference to the recent top-ups scandal, saying:
The recent revelations about certain organisations in the charitable sector have understandably damaged public trust and confidence. The commencement of the key measures in the Charities Act will provide the increased transparency and accountability that will allow this trust to be rebuilt.
He said that he has recently received sanction from the Minister for Public Expenditure and Reform to appoint an interim CEO and a number of other staff “from within existing resources”.
According to Shatter, an early priority for the new authority will be the creation and publication of a statutory register of charities.
“All registered charities will be required to provide reports to the authority each year on their activities and these reports will be made available to the public,” said the Minister.
“This will provide a much needed increase in transparency and accountability in the charitable sector, and will support the good practice in charity governance and management that is critical to a vibrant charity sector that commands the trust and confidence of donors and beneficiaries alike.”
The news was welcomed by The Wheel, which represents 930 Irish charities, welcomed the new, describing it as a “breakthrough”.
Deirdre Garvey, Chief Executive of The Wheel said: “We would like to congratulate Minister Shatter on making good on his commitment to bring the Charity Regulator into operation in 2014.”
Concern also welcomed the news, saying it has been “calling for this on a consistent basis since 2009″.
Meanwhile, Anne Hanniffy, CEO of Fundraising Ireland, said that the first job of the Regulator should be to introduce mandatory financial and operational standards so that donors can determine immediately where their money is going.
She said that the CRC revelations “have betrayed not just the hard-working staff, the families and the clients of CRC but the entire charity sector in Ireland”.
Boardmatch, the national corporate governance charity of Ireland, said it “broadly” welcomes the Minister’s announcement, but it is “cautious about the impact in the short term of the establishment of the Charity Authority”.
Earlier this week, the Central Remedial Clinic appeared before the Public Accounts Committee (PAC) on the top-ups scandal.
It emerged that the former CRC chief executive Paul Kiely received a retirement pay-off of more than double what he had previously disclosed to TDs.
Share the internet plan to give users free access to other people’s Wifi?
Irish customers with UPC will be able to use smartphones and tablets to hop on to each other’s broadband connections in a new initiative to “share the internet”.
The company insists that the so-called ‘Horizon Wi-Free’ initiative, which is set to be rolled out to 150,000 homes by the summer, would not compromise the security of UPC customers’ accounts.
UPC’s broadband customers will get the added service for free — they will have to register on the operator’s website and get a secure pin number to use the service.
If they are in the home of another UPC customer, or in the vicinity, they will be able to effectively hop on to their internet connection and access online services.
However, a different channel is used to the main user, so that their internet security is not compromised.
“One of the things we locked down first was the security and quality of enabler-homes’ broadband accounts,” said UPC’s head of consumer products Ronan McEvoy.
“So the channel used to allow other UPC users to access the home’s broadband is completely separate and is limited to 2.5 megabits per second.”
Mr McEvoy said that the service was only available to other customers of UPC.
He said that around half of UPC customers have the necessary modem to allow others to use their broadband freely, and that those who owned the account could opt out of allowing the service to activate.
“Frankly, we don’t expect many to opt out as we think it’s a beneficial service,” he said.
Mr McEvoy said that the service was typically targeted at people who were visiting friends’ homes and who needed to access an internet service but did not want to ask for their host’s wifi password.
He said that up to five people could use the service at any one time and that any internet-enabled device would be capable of using the service, including smartphones, tablets and laptops.
UPC recently increased its business users’ broadband speeds to 250Mbs.
“Our network has the potential to go far beyond the speeds we currently have in place,” said Mr McEvoy. “But Horizon WiFree is a way of giving secure broadband access to UPC customers outside their own homes.”
Did dogs really evolve from grey wolves?
New evidence suggests otherwise.
New genetic research seemingly overturns the long-held notion that dogs evolved from the gray wolf.
It turns out that today’s dog breeds may not have evolved from the gray wolf, at least not the kind of gray wolf that exists today.
A study in the current issue of PLoS Genetics suggests that, instead, dogs and gray wolves share a common ancestor in an extinct wolf lineage that lived thousands of years ago.
An international team of researchers generated genome sequences from three gray wolves – one each from China, Croatia, and Israel, the three countries where dogs are believed to have originated. They then sequenced the genome of a basenji dog from central Africa and a dingo from Australia. Both the regions have been historically isolated from wolf populations, according to a press release by The University of Chicago Medical Center.
Analysis of these genomes from the wolves and the dogs showed that the dogs were more closely related to each other than they were to the wolves. The wolves, too, were closely related to each other than to the dogs.
Additionally, the scientists did not see a clear evidence linking dogs to any of the living wolves that were sampled.
“One possibility is there may have been other wolf lineages that these dogs diverged from that then went extinct,” said John Novembre, associate professor in the Department of Human Genetics at the University of Chicago and a senior author on the study.
This shakes up the popular belief on domestication of dogs that are considered to be these “few docile, friendly wolves” which later became dogs after they were adopted by early farmers. Instead, the earliest dogs might have started out among hunter-gatherers before adjusting to an agricultural life later, Adam Freedman, a postdoctoral fellow at the University of California, Los Angeles (UCLA) and the lead author on the study, told the Monitor.
There does exist some amount of genetic overlap between some modern dogs and wolves. But this is thought to be the result of interbreeding after dogs were domesticated, not a direct line of descent from one group of wolves, according to the press release.
“If you don’t explicitly consider such exchanges, these admixture events get confounded with shared ancestry,” he said. Admixtures are hybrids produced due to interbreeding between two different population groups. “Dog domestication is more complex than we originally thought,” said Dr.Novembre.
This findings, says Dr. Freedman, will help them to study the genes involved in making dogs more dog like, and understand the history of evolution among the canines “We’re trying to get every thread of evidence we can to reconstruct the past,” Novembre said. “We use genetics to reconstruct the history of population sizes, relationships among populations and the gene flow that occurred. So now we have a much more detailed picture than existed before, and it’s a somewhat surprising picture.”