Ireland is enjoying a return to the international debt markets following the decision of ratings agency Moody’s to upgrade its status to investment grade, with yields now at their 2006 level and a successful €3.75 bn ($5.11 bn) 10-year government bond issue.
The Irish stock market has also boomed this past year, gaining 35 percent and significantly outperforming the broader European market, which was up 23 percent on average.
‘Last year was a transformational one for most equity markets,’ says Paul Burke of Dublin-based brokerage firm Davy. ‘Irish Stock Exchange (ISE) market turnover was up 54 percent in 2013, and the ISEQ Index was the fifth-best performing market worldwide last year. Both those levels are the highest since 2008.’
The second half of the year, in particular, has seen the return of international investors attracted by prospects of economic recovery and attractively priced stocks, whether purely Irish players or multinationals headquartered in Ireland.
‘Interest from the UK and also the US has been very noticeable,’ says Burke, whose firm co-handled the first ISE main market listing in more than five years. Green Property, an investor in prime commercial and office property in Dublin, is the country’s first-ever real estate investment trust (REIT) after new legislation was introduced last year. ‘From the five major takers, two were from the UK and three were heavyweight buy-side institutions from the US,’ Burke adds.
Davy also placed €600 mn in stock for Bank of Ireland, again widely scooped up by US investors eager to ‘get into the stock early’. The financial group, which recently bought back €1.8 bn in preference shares from the Irish government, is set to become one of the two ‘pillar’ banks emerging from the restructuring of the banking system, alongside Allied Irish Bank, still in state ownership.
‘Bank of Ireland and Green Property REIT are two good examples of broad investor interest but also notable proof the US investor found the market in the second half of the year,’ confirms Burke, who also cites ferry company Irish Continental Group and general insurance firm FBD as receiving strong investor focus.
High levels of sovereign debt and unemployment may overshadow the recent string of positive reports for the former Celtic Tiger, however, although it was the first European country to exit the ‘troika’ bailout program. ‘The general feeling is that austerity policies will remain in place for probably another two budgets,’ says Burke. ‘We’re only halfway in terms of economic performance and outlook, and there’s still a lot of work to be done.’
