Glas Securities Morning Comment

3rd September 2010 

The Irish government bond market outperformed core markets once again yesterday with the intermediate sector continuing to attract most demand. In the post ECB Meeting Q&A, Jean-Claude Trichet stated he was "confident Irish Government will deal with problems" and that he would "encourage Ireland to continue to front load measures" but he would not comment on the recent statement in the Daily Telegraph from the Governor of the Irish Central Bank, Patrick Honohan, that Irish bond spreads vs Germany were "ridiculous". If the current stability in the Irish Government Bond market continues, we would expect to see some Irish Bank ELG issuance being announced, perhaps as soon as next week. Irish Exchequer Returns for the first 8 months of the year, released late yesterday, saw an improvement in Tax Revenues from recent months although are still running 0.7% behind the Department of Finances forecasts. We note however that the Department of Finance reconfirmed its forecasts for 2010 from last December's Budget. Fitch Ratings revised its Long Term Issuer Ratings for EBS Building Society from BBB- (Positive) to BBB- (Evolving) pending the outcome of future ownership of the society. There are additional reports this morning that AIB's sale of its majority stake in Bank Zachodni may be announced as soon as early next week. Yesterday's Irish times suggested that the offers for the stake are thought to be in the €2.7bn-€2.9bn range.