Liams Last Post : Spain next to be cut by S+P adds to the nerves , AIB AGM

Good Afternoon

 

I was out of the office meeting clients yesterday and talking about how Ireland was beyond the inflection point , that we are in an upgrade cycle and that now that Bank of Ireland has launched the re-capitalisation process with a successful placing to Institutions of the first tranche of Eur500m (apparently 3x to 4x oversubscribed ) and that this alone would begin to focus attention on the rest of the market and to other stocks.  Indeed yesterday saw three International brokers upgrade their recommendations on CRH , Smurfit Kappa and AIB.

 

I managed to be busy enough that I got a shock at the scale of the mark down in prices of stocks after the announcement by S&P of their down grade of Greek Sovereign Debt to Junk status. Up to this the Greek issue was all talk but markets were focussed on earnings prospects and the definite signs of economic recovery and were prepared to ignore Greece.

 

Today , was another nervous day with markets opein sharply lower again then bouncing and closing weak after S&P cut the Spanish rating to AA.

 

Sovereign debt fears are now the primary driver of markets.

 

AIB today at the AGM said that the management team,  led by Group Managing  Director Colm Doherty,  has until 31 December to take the actions to meet our capital requirements and that the group has a series  of actions planned  in this regard, however,  if  they are  not able to meet the regulatory  requirements through these planned actions,  then

the Government will provide the additional capital needed. This would see the state increasing its  stake in the bank. The extent of  the Government's stake will become clearer in the coming months.  AIB's self-help  plan involves the sale of UK and Polish businesses - and stake in M&T. The capital raising  plan also includes  an equity issue  targeted at  private

investors which will be underwritten by international investment banks or the Government.  The market was unimpressed by AIB continuing to talk the talk but not yet walk the walk and the shares fell in line with their Bank of Ireland peers down -2.5%.

 

 

Markets are nervous …

 

Have a good evening

 

Liam

 

___________________________________________

Liam Boggan

　

Merrion Stockbrokers

Tel.: 353-1-2404171

Mob:353-87-2313505

www.merrion-capital.com

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