Review of State assets will not be ready until middle of next month
THE REPORT on a review of State assets chaired by Colm McCarthy will not be presented to the Minister for Finance until mid to late January, The Irish Timeshas learned.
The review group was due to file its report by the end of the year. As the report will now be issued to the Minister by the middle of next month at the earliest, it is unclear if it will be presented to Government before the general election.
The delay in the publication comes as ratings agency Moody’s downgraded €550 million of Bord Gáis debt yesterday. The long-term debt securities was downgraded to Baa1/P-2 from A2/P-1.
The ratings agency said the downgrade was a result of its downgrading of Ireland’s sovereign debt last week as the ratings of An Bord Gáis were “sensitive to changes in the credit quality of the government of Ireland”.
The agency had placed the debt on review for possible downgrade in October on concerns over sovereign debt ratings.
Pointing out that the downgrade was in the context of Moody’s decision to downgrade Ireland’s sovereign rating, An Bord Gáis said the downgrading was “a disappointment” but that the fundamentals of the business remained sound. However, it said any further deterioration in the credit rating “would be a matter for concern for the company”.
In its downgrade, Moody’s said that it “noted” the review of State assets commissioned by the Department of Finance.
It said the downgrade reflected assumptions about the company’s dependence on the sovereign and the likelihood of it providing support. The agency also changed the outlook of An Bord Gáis to negative, reflecting “uncertainty arising from the ongoing review of State assets in Ireland” as well as the potential consequences for An Bord Gáis of the decline in the Government’s financial strength.
Last month Standard Poors similarly downgraded the utility’s credit and placed it on negative watch following the downgrading of Ireland’s sovereign debt rating by that agency.
Moody’s said yesterday the ratings of utility companies would “normally be constrained by the rating of the country where most of their activities are located”.
Along with the DAA, An Bord Gáis is one of the few Irish semi-State companies to have a credit rating from international ratings agencies. Its last major debt-raising exercise took place in 2009 when it raised almost €1 billion in two separate transactions. It is believed the company has enough cash and credit facilities to facilitate its investment plans until 2012.
Separately yesterday, the knock-on effect of last Friday’s downgrading of Ireland’s sovereign debt by Moody’s was highlighted when the ratings agency downgraded various debt categories of several Irish banks, including the senior debt of Anglo and Irish Nationwide and the bank debt guaranteed under the Government’s Eligible Liabilities Guarantee Scheme.
Moody’s downgraded the bank deposit ratings, the senior debt ratings, the bank financial strength ratings and most of the junior securities of AIB, Bank of Ireland, EBS, Irish Life Permanent and Irish Nationwide.
It also downgraded the senior debt ratings of Anglo Irish and Irish Nationwide by three notches to Ba3 (negative outlook) from Baa3 as well as the debt guaranteed under the eligible liabilities guarantee scheme – ie the backed senior debt of AIB, Anglo, Bank of Ireland, EBS and Irish Life & Permanent.
“Moody’s concludes that the banks’ debt ratings are affected by the downgrade of the Irish Government as the high degree of systemic support from the Government had so far largely mitigated the pressure stemming from a much weaker standalone credit profile of these banks,” it said in its statement.
“The downgrade of the Government to Baa1 reflects Moody’s view of the revised capacity of the Government to extend support to its banking sector over and above the contingency fund set as part of the EU-IMF package.”