A round-up of other news stories in brief
Moody's weighing up downgrade of Irish mortgage-backed bonds
Ratings agency Moody’s may lower its ratings on a series of Irish mortgage-backed bonds because of higher bank bailout costs, surging government bond yields and the uncertain economic outlook. The agency said yesterday it was reviewing its ratings on some mortgage-backed bonds issued by Ulster Bank, EBS, ICS, Irish Life Permanent and KBC, with a total of roughly €9.7 billion in debt assets affected.
The agency expects the “peak-to-trough” decline in house prices to return valuations to 2001 levels. As it stands, most Irish mortgage-backed bonds have a “significant portion” of loans in negative equity, Moody’s said.
Moody’s will finalise its decision on a possible downgrade of the Celtic Residential, Emerald Mortgages, Fastnet Securities, Kildare Securities and Phoenix Funding bonds as soon as it has concluded its review of Irish Government debt and Irish bank ratings.
Luxury group LVMH defies forecasts
LVMH, the world’s biggest luxury group, beat forecasts with a 14 per cent rise in comparable third-quarter sales, driven by the solid recovery of its fashion, wines and champagne businesses.
Analysts had forecast like-for-like sales growth of 11 per cent, compared with a 3 per cent drop in 2009, the worst year for the luxury goods industry in more than two decades.
“As restocking effects are now over across most luxury product categories, Q3 sales trends at LVMH and the broader sector are more closely aligned with underlying consumer demand, a positive in the run-up to Christmas,” Citi said in a note.
LVMH’s strong results come as German fashion house Hugo Boss, known for its sharply cut men’s suits, raised its 2010 profit forecast and posted better-than-expected third-quarter figures.
Greece's jobless rate to increase
Greece’s jobless rate again reached 12 per cent in July after a brief dip in June, data showed yesterday.
It is set to head higher as austerity measures to control the country’s debt burden aggravate a weak economy.
Unemployment rose from 11.6 per cent in June back to May’s level. It is now almost two percentage points higher than unemployment in the 16-member euro zone, which was revised up to 10.1 per cent in July.
The Greek government expects the jobless rate will worsen to 14.5 per cent next year as the economy suffers its third consecutive year of contraction.
Investors are closely watching public reaction to government wage and pension cuts agreed as part of a €110 billion EU/IMF deal to help Greece stave off the risk of default. There are concerns that protests and social unrest may jeopardise fiscal consolidation.
UBS to take no action against ex-bosses
Swiss bank UBS has reiterated it will not take legal action against former management for losses that brought it to the verge of collapse during the financial crisis.
The move lessens the chance of any action being taken against former executives, because suits by individual shareholders would in many cases be prohibitively expensive and the Swiss government has said it could not provide the financial support for a class action.
“Experience has shown that such cases last many years, generate high costs, lead to negative international publicity and thus hamper UBS’s efforts to restore its good name in the markets in which it operates,” UBS said in a report yesterday.
UBS prepared the transparency report – designed to review how tens of billions were lost during the crisis, and how a damaging investigation by US tax authorities came about – at the recommendation of a Swiss parliamentary committee.
