Monday Newspaper Review - Irish Business News and International Stories - - August 23, 2010
The Irish Independent reports that record numbers of applicants have pushed up the entry points for the majority of college courses this year.
Points have risen for a massive 700 courses, while remaining the same or dropping for the other 560. And the figures reveal there is intense competition for courses that are tipped to secure the jobs of the future.
Some of the biggest point surges are in science and computing, reflecting higher student demand, in response to the advice that these will provide the skills needed to
secure employment after college. Medicine is also much harder to get into this year than last -- and, for the first time, a nursing course hit the 500-point mark.
The rising points for medicine will renew controversy over the Health Professionals Admission Test, which, instead of creating a more level playing pitch, appears to have
created new distortions.
Points for key courses in agriculture are also up this year.
But areas such as law, construction and business experienced a downward drift in points in key courses. Among the 851 honours degree courses, points increased for 462, while points fell in 216 and remained the same for 61.
The three Dublin universities all reported more point increases than decreases, as did NUI Galway and NUI Maynooth.
However, the position was reversed in the two Munster universities, with a decline in points for many courses in both UCC and the University of Limerick.
Points for degrees at UCD almost universally increased -- reflecting the first-preference popularity of its degrees.
Analysis shows that of the 428 higher-certificate and ordinary-degree courses, 233 experienced a points increase, while points fell in 93 and remained the same for 50 courses.
While some CAO applicants will be disappointed this year with the point increases, there were never so many offers.
It has been a record year all around for college applications, offers and acceptances, so far.
There were more than 77,000 applicants and more than 56,000 of those have received at least one offer, either for an honours degree course or an ordinary-degree/higher-certificate course.
More than 7,000 applicants have accepted a place on earlier rounds, up 12pc on last year.
Last year, 45,000 college places were filled at the end of the CAO offer season, which was the biggest number ever.This year, as well as the 45,485 students who sat the Leaving Cert and applied to the CAO, there were a further 20,000 applicants who sat the Leaving in previous years.
Many of these 20,000 applications came from people who were in the workforce and had lost their jobs or wanted to improve their career prospects.
And in engineering, some courses experienced an increase in demand and higher points.
Many students are automatically ruled out of engineering because they don't have the necessary "honour" in maths.
Only 16pc of Leaving Cert students take maths at higher level -- a figure that worries the Government. Students who are offered places in science, engineering and maths were urged last night to take them.
The Irish Independent also reports that some debt holders in Eircom could receive as little as 10 cent in the euro if the telecoms company defaults on its €3.6bn of debts, according to an analysis by a leading ratings agency.
Standard & Poor's (S&;P) has done a 'recovery analysis' on the debt held by the parent companies that own Eircom.
While senior secured debt is likely to have recovery rates of between 90 and 100pc in the event of a default, debt holders further down the credit list could be facing big haircuts.
The second-lien loan, known as loan D, is only likely to leave holders with a recovery of between 10pc and 30pc of their principal.
The holders of a €425m payment in kind (PIK) loan would be facing the most severe haircuts. "The recovery rating on this debt is six, indicating our expectation of negligible recovery (0pc to 10pc) in the event of a payment default,'' state the company's analysts.
Eircom strongly rejects any suggestion that it could default on its debt load. However, speculators in the market who hold bond insurance -- known as credit default swaps (CDS) -- take a different view and this has sent the value of CDS contracts soaring in recent months.
S&P gives Eircom a valuation of €3bn in a distressed environment. It says that while Eircom has leading market positions and a "satisfactory business risk profile'', a default from excessive leverage cannot be ruled out entirely.
While Eircom is not in default on any loans, the pressure is building because the company's revenues and earnings are falling, potentially triggering a breach of its loan covenants.
S&P says: "We think revenues will continue to fall in the coming quarters as difficult economic conditions are likely to continue. This will compound structural declines in fixed telephony revenues."
Offsetting this is Eircom's ambitious cost-reduction programme, which has been noted by the ratings agencies.
The pension deficit at the company has also been tackled in recent months, but this has had little impact on the debt ratios, the agency points out.
"Eircom's cash-generating ability is likely to remain constrained because of its high interest burden, a difficult operating and competitive environment,
restructuring payments and significant capital expenditures,'' said the latest note.
While the company is facing a serious debt headache, the liquidity position of the company is strong, states the agency.
Eircom has €267m of unrestricted cash to call on in case of emergencies and another €123m in an undrawn credit facility. The debt problems facing the company are more long term, the agency accepts.
It points out that the undrawn facilities and cash cover "modest debt maturities'' of €44m in the next financial year and €88m in financial year 2012. Eircom's financial year ends in June each year.
The company seems unlikely to get any relief from the ratings agencies in the foreseeable future. S&P concludes: "At this stage, we deem the chances of a higher rating in the future to be remote, as this would likely require the removal of covenant pressure on a sustained basis."
The Irish Times reports that State toxic assets agency Nama has written to bank chief executives asking them to step up their efforts in providing it with full information about the loans that it is buying from them.
Nama will this week complete the takeover of loans with a nominal value of €8 billion from State-owned Anglo Irish Bank, whose reckless lending during the boom left it with a severely damaged loan book.
The agency will pay the bank slightly less than €4.8 billion for the loans, as it is applying a discount of just over 60 per cent to the value of the debts. The latest estimates of the cost of saving Anglo run to €25 billion.
According to bank sources, Nama chief executive Brendan McDonagh has written to his opposite numbers at Anglo, AIB, Bank of Ireland, Irish Nationwide and the EBS asking them to step up their efforts in providing due diligence on the loans that they are transferring to the agency.
Mr McDonagh’s letter also says that the agency has appointed Deloitte as its internal auditor and states that the firm will have the power to scrutinise the banks’ own processes for dealing with Nama.
Mr McDonagh has also told the bank bosses that after Nama has taken over the third tranche of loans from the five institutions, it will change how it times its purchases of their debts.
For the first and second tranche, the agency waited until all the institutions were ready to begin transferring their loans before it began taking them over.
It will continue with this approach for the third tranche, which it will begin buying next month. However, for the fourth, fifth and sixth tranches, which it will be taking over in October, November and December, it will begin taking over the
loans as each individual institution is ready to hand them over rather than waiting until all of them are ready.
To date, Nama has bought loans with a nominal value of €28 billion from the five banks, which is around 35 per cent of the €80 billion total that it is due to buy. It has paid less than half what the loans were originally worth.
Nama has already revealed that the banks originally misled the agency on the real value of their loan books and on how many of the debts were actually producing an income.
The result is that the discounts at which Nama is buying the loans are a lot bigger than what was originally expected. Nama completed the takeover of the second tranche of loans from all participating institutions except Anglo last month.
It took over €5.2 billion worth of debts from the other four banks, paying an average discount of 48 per cent.
It took longer for Anglo to transfer its loans as there were more of them and the total amount of money involved was higher than that owed to the other four put together.
The 60 per cent discount it is applying to the €8 billion worth of Anglo loans is far higher than the average discount applied to the debts owed to the other banks.
Nama is taking over all property-related loans worth more than €5 million owed to the five banks involved. It has pledged to pursue the developers involved for the full amount due.
The Irish Times also reports that the organisation set up five years ago to collect and recycle the Republic’s old TVs and washing machines is now a profitable exporting business with substantial cash reserves in the bank.
Waste Electrical and Electronic Equipment (WEEE), the industry-backed body that collects and recycles electrical and electronic goods, just reached its fifth anniversary this month.
The not-for-profit company’s chief executive, Leo Donovan, says it is one of the best performers in its league in Europe, because Irish people recycle more electrical goods than their fellow EU citizens.
The average across the EU is 4kg per person, but Irish people recycle 9kg per person. Their enthusiasm for recycling has turned into solid business that reuses and exports most of the material it collects.
Since it was set up in 2005 in response to a Brussels directive, it has collected and recycled more than 33 million units, which includes everything from dishwashers and TVs down to energy-saving lightbulbs.
Its brief covers everything that has either a battery or a plug.
That material included enough TVs and monitors to go around the M50 14 times. The metal contained in all the small household appliances it has collected since 2005 comes to six times the weight of the steel used in the construction of the new stadium at Lansdowne Road. It has collected enough fridges, washing machines and dishwashers to fill Croke Park 14 times.
WEEE is funded through industry membership fees and producer recycling charges, which are passed on to the consumer.
The material it collects falls into three basic categories: large goods, such as washing machines, fridges and dishwashers, TVs and monitors, and small household appliances.
The large goods are sent for initial processing to a plant in the north, from where they are then sent to Britain. There the material is broken down further and baled and sold as a commodity.
The TVs and monitors are 100 per cent recyclable, according to Donovan. They are processed in Ireland, and the glass is separated out and sold for reuse in new TV screens and monitors.
The smaller household appliances are processed in Ireland, where the material is prepared for reuse and exported.
“Overall, around 75 per cent of what we collect is exported and sold as raw material on world markets,” he says. The company’s export business is worth around €3 million a year, and supports jobs in collection and processing.
WEEE costs around €8 million a year to run and it generates a surplus on its activities. The company uses this to ensure that it maintains reserves.
The cost of collecting and recycling equipment is paid up front, before it is used or reaches the end of its useful life. The company has to maintain reserves against what it is paid up front.
WEEE has built up about three years of reserves, or €24 million, at this stage.
“So, if everything stopped tomorrow, we would still be able to meet our commitments to collect and recycle the goods that people have already paid for,” Mr Donovan says.
In a new development, the company has begun to target batteries used in consumer goods.
The Irish Examiner reports that Finance Minister Brian Lenihan said he understands the public "incomprehension and anger" at the vast sums of money being pumped into the banking sector, particularly Anglo Irish Bank.
Delivering the keynote speech at the annual Michael Collins commemoration ceremony in Béal na mBláth yesterday, Mr Lenihan said fury was "a quite reasonable response to the incredible recklessness and incompetence" that fuelled the banking crisis and that "like others, I hope that anyone who broke the law will face its full rigours". Defending Government support of the banks, Mr Lenihan said its decision was based on expert advice that it needed to stand behind the banks to ensure a sustainable financial system is established.
"And, in the case of Anglo, to ensure that the resolution of debts does not damage Ireland’s international credit-worthiness and end up costing us even more than we must now pay," Mr Lenihan said.
The minister said neither the bond markets nor our EU partners would tolerate any slippage and this meant, inevitably, that the next budgets will continue to have strict control of expenditure.
"What I can promise is that as minister I will try to ensure that the burden is borne by those who can best afford it," he said.
Speaking to reporters after the ceremony, Mr Lenihan said research had shown that those who were in the most exposed position had suffered the least in the recession.
He said he and the Governor of the Central Bank, Professor Patrick Honohan, agreed matters concerning the banks needed to be resolved quickly and that whatever solution was found "must keep the cost to the taxpayer to an absolute minimum" and must also secure the approval of European authorities.
Mr Lenihan said his department was in discussions with European officials to bring matters to a speedy conclusion.
He also said he did not believe his health was impairing his capacity to do his job. The minister, who is suffering from pancreatic cancer, said he had been to every cabinet meeting since January with the exception of a couple he missed while on European business. He also said he had not shirked participation in Dáil question time or avoided his legislative duties while completing various treatments.
The minister, who made history as the first Fianna Fáil party member to deliver the keynote oration at Béal na mBláth, called on all in public life to let the spirit of Michael Collins inspire them through the current economic crisis
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