BG's credit rating AA- at Standard & Poor's and three notches lower at A3 at Moody's is on review for further
BG's credit rating, AA- at Standard & Poor's and three notches lower at A3 at Moody's, is on review for further downgrades until the report is published.Mr Burgess, known as one of the most innovative corporate treasurers around, says that has prevented him from taking advantage of current borrowing conditions."If I had had a free hand in the past two years, I think we would have been in the market at some point," Mr Burgess says. "We do recognise that the middle to end of the yield curve is good value." Copyright: IOS & Bloomberg. The Irish Central Bank finally bowed to the inevitable last week and raised interest rates to defend the punt after it had come under attack from currency speculators. But the move is not expected to halt further selling in the currency this week. Official interest rates were raised a quarter percentage point to 6.75 per cent on Thursday after the punt fell as much as 4 per cent against the deutschmark in three days.
Speculative selling began in earnest on Tuesday after the central bank indicated it was no longer prepared to prop up the currency. Economists said the rate rise will do little to deter speculators, who are selling on expectations that the punt will enter Europe's planned single currency at its central rate of 2.41 deutschmarks in the European exchange rate mechanism. That implies a drop of about 17 pfennigs between now and the end of next year.Bank of Ireland chief economist, Jim Power, said the "next big test" for the punt would be on Tuesday. "There is some risk that the speculators will have another go at it," he said.The impact of the interest rate rise in calming the market cannot be judged until then as European markets were closed for the May Day holiday on Thursday and many European investors will not be back at their desks till tomorrow, when Irish markets themselves are closed for the Bank Holiday.The punt rose to 93.25 British pence, from 92.20, before the rate increase, while it rose to 2.5900 deutschmarks, from 2.5801.The British pound was volatile though as traders assessed the impact of the Labour party's overwhelming victory in the UK. A rise in sterling this week could push the punt back up against the deutschmark, providing further fodder for currency speculation against the punt.In addition to the fall of the punt, which raises concern about imported inflation, lending figures released by the central bank last week added to the pressure for higher rates.
Meanwhile, non-government borrowing rose 18.6 per cent in March from a year earlier.Irish building societies hinted that the rise in official rates could spark a 1 per cent increase in mortgage interest rates. This may help take the froth out of Ireland's booming property market where house prices have risen 14 per cent in the last year.The rate rise runs counter to Irish official policy of joining monetary union from the start, in 1999. If Ireland is to be a founding member, Irish interest rates must fall closer to German levels in the run-up to monetary union. Irish official interest rates are now more than double those in Germany Copyright: IOS & Bloomberg. Economic reports this week are expected to show that the outlook for domestic demand in Germany is starting to improve. Unemployment is seen falling slowly back from its record highs, while manufacturing orders are expected to have risen on strong foreign demand. New orders for Germany's manufacturing industry probably rose 0.4 per cent in March from February and gained 4.9 per cent from a year earlier, economists believe. Consumers are also expected to spend more as job security concerns ease along with falling unemployment.
Economists say the unemployment rate in Germany fell to 11.4 per cent in April after retreating in March from February's postwar high. Figures will be published on Wednesday."We're now in a stage where domestic demand is starting to kick in," said Joachim Fels, economist at Morgan Stanley in London. "I'm expecting to see strong signals for a rebound in the next few months."German companies are benefiting from the 11 per cent decline in the deutschmark since the start of the year that has made their goods cheaper in foreign markets. Favourable exchange rates helped German companies record an export surplus of DM9.2bn (pounds 3.3bn) in February, up from a DM5.6bn trade surplus in January, the Federal Statistics Office said.Steel and machinery maker Fried. Krupp said it expected improved earnings in 1997 as global demand compensates for a weaker domestic market. The company said new orders rose 5.6 per cent in the first quarter.Machinery and telecommunications company Mannesmann said last week that first-quarter sales rose 14 per cent from the year-ago period to DM8.2bn on healthy new orders.German manufacturers saw new orders rebound in March thanks to increased demand for capital goods in Germany as the country's economic recovery gathers pace.While demand for machinery and other capital goods is set to rise, analysts said they expected orders for consumer goods to recover more slowly as joblessness retreats only gradually.The number of German unemployed probably fell by 10,000 in April.