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| Share Name | Share Symbol | Market | Stock Type |
|---|---|---|---|
| Cluff Gold | CLF | London | Ordinary Share |
| Price Change | Price Change % | Share Price | Last Trade
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|---|---|---|---|---|
| 0.00 | 0.00% | 76.00 | 00:00:00 |
| Open Price | Low Price | High Price | Close Price | Previous Close |
|---|---|---|---|---|
| 76.00 |
| Top Posts |
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Posted at 03/9/2012 15:51 by mechanical trader Cluff Gold has "packed" newsflow schedule, says Edison3:30 pm by Giles Gwinnett It also said it expected further improvements in grades and output from its producing asset - the Kalsaka mine in Burkina Faso Investors can look forward to plenty of newsflow from West Africa focused Cluff Gold (LON:CLF, TSE:CFG) in the rest of the year, says research house Edison. Scheduled is a resource update for the fomer producing Yaoure project in the Ivory Coast in the fourth quarter and a preliminary economic assessment for the Sega project, which neighbours the Kalsaka project, analyst Charles Gibson points out. Meanwhile, in Sierra Leone, a resource update is scheduled for Cluff's flagship Baomahun project in October this year. At Yaoure, Cluff is assessing a "potentially very large" sulphide resource, which is believed to sit beneath the previous open pit mine. It comes after, last month, the company revealed a 21 per cent increase in production in Q2 this year compared to the first quarter. It also said it expected further improvements in grades and output from its producing asset - the Kalsaka mine in Burkina Faso. Gibson said that for the remainder of the year at Kalsaka, the higher grade is expected at least to be maintained, the stripping ratio to remain below 6.7 and a degree of the gold locked-up in inventory to be released. Consequently, output from the project is still expected to be in the range of 60,000 to 70,000 ounces at a cash cost for production of US$986 per ounce, he said. Edison puts a valuation of the company at over £1. "Assuming the efficient evolution of operations from Kalsaka to Sega and the successful execution of the Baomahun mine plan, which is on track to produce first gold in FY15, Edison estimates a current value to investors from future potential dividends of US$1.62 (£1.02) per share after exploration expenditure (at a long-term gold price of US$1,350/oz and a discount rate of 10 per cent to reflect general equity risk), says Gibson. This afternoon, Cluff shares were up 1.44 per cent, changing hands at 70.25 pence. |
Posted at 13/8/2012 09:26 by amargosa August 06, 2012Cluff Gold Will Shortly Reveal How It Plans To Fund Development At The Multimillion Ounce Baomahun Gold Project In Sierra Leone By Alastair Ford How are things shaping up at Cluff Gold amidst the current market turmoil? Life's not easy, says finance director Pete Gardner, but it could be a whole lot worse. Location of Baomahun For a start, the company's Kalsaka gold mine in Burkina Faso should generate between US$50 million and US$60 million in cash flow this year. The latest operational numbers are due out on 15th August, and they show that if not exactly soaring away, the company is at least on track. "Q2 was alright", says Pete. "I wouldn't say it was a stellar performance, but we generated cash. It was a decent quarter and we should have a decent story coming out of it." That's no bad thing in a market where new capital is scarce and share prices are plummeting, and it has a special resonance since investors had been, until very recently, fretting about Kalsaka's short mine life and dwindling reserves. However, that issue was addressed shortly before Cluff's founder and chairman Algy Cluff left for entrepreneurial pastures new earlier this year. Back in February Algy brokered a deal with Orezone Gold Corporation to acquire the nearby Sega deposit, and thereby extend the mine life beyond 2013. The distance between Sega and the Kalsaka plant will involved some additional trucking costs, says Pete. But he adds that the ore at Sega is higher grade and will ultimately pay for the trucking. So Kalsaka survives and the cashflow remains. But that's only half the story as far as Cluff is concerned. The company also has two other major projects on the go, the former producer at Yaoure in Cote D'Ivoire, and the multimillion ounce development project at Baomahun in Sierra Leone. "The big story", says Pete, "is Baomahun." The preliminary economic assessment that the company put out towards the end of 2010 shows why. Using a US$1,100 gold price and on the basis of a 1.4 million ounce resournce, a range of consultants including SRK, AMEC and SGS concluded that Baomahun could support a 157,000 ounce per year operation over an eight year life, mining at a cost of US$500 per ounce. And there's little doubt that Baomahun could get even bigger. The resource is undoubtedly there, but so too is pressure from the Sierra Leone government to get on with mining. But either way, it was on the strength of the potential at Baomahun that Algy Cluff was always able to tap American investors for huge sums of money. And it was that same potential that tempted new chairman John McGloin away from a plumb job as head of mining at the London office of Canaccord, newly merged with Collins Stewart. John's a geologist with plenty of experience of operating and consulting in Africa, and adding his insights to those of company chief executive Peter Spivey has been hugely beneficial, says Pete. Hence there's been more drilling at Baomahun recently, ahead of a resource update that's now due in October. "And when we get that resource we'll give guidance on the feasibility study", says Pete. The market's been waiting a long time for the Baomahun feasibility study, though, which may be one reason why the company's shares have drifted, in spite of the robust production and cash flow, from highs earlier in the year of over 100p to the current 49.5p. But it's a tough market all round, and the companies that are really getting punished are those with perceived financing risk. Cluff's got Kalsaka to fall back on, but as far as growth is concerned it needs US$200 million or more to get Baomahun off the ground, and it'll take more than Kalsaka production to get there. "Ultimately", says Pete, "people are very aware of financing risk. But we are not too far away from the point where we will demonstrate how we will finance Baomahun." Something will be announced, he promises, before the Denver Gold Show, which gets underway on September 9th. That announcement could trigger a re-rating for two separate, but related reasons. First, the very existence of a financing plan will go a long way towards assuaging doubts about Cluff's ability to grow in the current adverse economic climate. And second, it will show that the new chairman is just as adept as the old when it comes to bringing big money to the table for development. |
Posted at 06/7/2012 06:36 by fitton Would it be very cynical to suggest that there may be manipulation with the share price to allow for the recent investors at 92p to pick up cheap stock to counter the rather poor performance of there investment.Always look after your big investors,you may need them again.Or is it just bad luck that a company that has produced some very good news over the last few months,has one mine produing over 70,000oz,has two other potentially very lucrative assets,has been tipped by everyone as a great investment, is just not worth the money.Surley it can't be manipulation, after all you wouldn't get Barclays Bank fixing,of all things the Libor rate,would you! |
Posted at 01/6/2012 10:22 by fitton Cluff are mainly owned but large institution investors.The small share holders, as with most companies are the last to know.The only good news is that only a few months ago they did raise £23m at 92p.Those investors will have had a very good insight into the future potential.The last time they raised money with the larger investors was at 40p.Then I said that the investors would be looking to double there money which did happen.I would love them to double there money again for my sake.The only consolation is that having been in Cluff for a long time,this short term weakness is based on very low volumes which is almost tradition with these shares.I guess if anyone has the money and the nerve,buying at these levels could well be a very good move in a few weeks,months. |
Posted at 19/4/2012 19:09 by inside building Cluff Investor relations - As nobody in the Cluff team has a background in PR or appear to know what investors want to hear (NEWS). Then i am surprised they actually bother calling it this. One of the biggest issues that Cluff have had in the past 3 years is their complete LACK OF INTEREST to the people who actually own the company (THE ONES WITH SHARES).Cluff have a project in Guinea - What has happened to this? Cluff have other Burkina Faso exploration assets that they bought - Where are these on the website or in the results? Cluff are drilling daily - why not tell investors what they are finding? Have Cluff issued a load more options that they haven't told anyone about? Perhaps it is just down to the fact that the girls at head office have not had someone in the UK telling them what to do? I really do hope that the new Exec Chairman will change this and issue more regular RNS and update the website. IB |
Posted at 24/3/2012 12:16 by pineapple1 Copied from the AVM thread.Much of it applies to this light weight dog.I,ve learnt my lesson with gold mines and i think others will eventually too that upside in most is very limited indeed. Out at £1 if we see it again but i doubt it will be available any time soon unless a generous bidder offers £1.20. Delusional bulls here talking of a 6 bagger.No chance unless they strike oil....lol There will be capital raise after capital raise resulting in an increase of 6 times m/cap eventually but likely 6 times as many shares given birth too as well.....imho simon gordon - 24 Mar'12 - 08:07 - 558 of 558 FT - 24/3/12: In gold mining, unexpected is not uncommon By Bryce Elder When it comes to losing investors money, equities have an endless scope to surprise. On Thursday, for example, the recent death of Colonel Muammer Gaddafi ended up costing the hedge fund manager John Paulson about £8m. An uprising among Tuareg mercenaries returning to Mali, recruited and armed last year by the former Libyan leader, this week triggered a military coup in the west African nation. Randgold Resources, the Mali-focused gold miner, dropped 13 per cent in response. It was another setback for Mr Paulson, whose hedge fund was still adding to its 1 per cent stake in Randgold during the fourth quarter. But how many investors could have anticipated this chain of events following the revolution in Libya? Judging by Randgold's share price, not many. Before this week, Randgold was one of only two London-listed large-cap gold miners to outperform the price of bullion over the past three years. The stock had risen 86 per cent, against a 77 per cent rise for gold over the same period, and had been trading in lockstep with gold over the past six months. But, with its Mali mines expected to provide at least two-thirds of Randgold's production this year, news of the military coup left the shares lagging the gold price by 14 per cent since 2009. Such events may be unpredictable, but they have not been uncommon. Egypt's revolution has cost shareholders of Centamin 42 per cent over the past year as the miner struggled with strikes and shortages of explosives. African Barrick Gold, down 24 per cent in a year, suffered after an mob armed with machetes attacked is mine in Tanzania. Randgold itself was under pressure in late 2010 as violence followed a disputed election in Ivory Coast. All of which may leave investors wondering why they should get involved with mining companies at all. Even without such "black swan" events to waylay the investment case, the political, technical and managerial risks still mean stocks rarely beat bullion. Physical gold has outperformed global gold equities 82 per cent of the time over the past 10 years, according to Citigroup. "Markets are telling us that gold stocks are boring," says Johnny Martin-Smith, an analyst at Westhouse Securities. "They react to bad news with alacrity and good news with a yawn." Supporters point out that physical gold does not provide a yield. Gold miners have been boosting dividends in the hope of attracting investors away from exchange-traded funds and similar vehicles offering a more convenient way to bet on bullion. Yet the sector remains some way from offering the kind of payouts that would attract income investors. In 2011, dividend yields for the gold producers were less than half the average for the mining sector at 1.3 per cent, according to BMO Capital Markets. And a rising gold price is unlikely to result in improved dividends, warns Citi analyst Johann Steyn. "Companies have to spend more and more capital to fight declining reserve and production profiles," he says. "Shareholders seldom share in the upside of margin expansion." Citi recommends investors favour smaller gold prospectors, which it says offer more exciting growth prospects than the majors. Avocet Mining, the only London-listed large-cap gold miner to beat the bullion price over the past three years, certainly matches that definition. Previously Aim-listed, Avocet entered the FTSE 250 this month, having gained 135 per cent over the period. Annual earnings per share are up fivefold and estimated gold reserves at its flagship mine in Burkina Faso have doubled since June. But much of the growth is already in the price. Avocet trades at about 16 times 2012 earnings forecasts, compared with an average of less than 13 times earnings for both the emerging producers and the majors. By contrast, African Barrick has dropped to 10 times this year's earnings forecasts, while Centamin trades at just 6 times 2012 profit. Avocet investors may also wish to note that Burkina Faso's government has been overthrown four times in the past three decades. |
Posted at 14/3/2012 07:43 by fitton The last time the company raised money from big investors it was at 40p.I said then that the investors would be expecting to see a 100% increase in there investment.That has been achieved, and now the company is going to the market once again with some very exciting plans.I am sure the same investors will be expecting a similar return.There is no reason for concern about the share price falling to far.Once again the small investors is the last to know but I would be 100% sure that all investors are in place.The book build should be seen as a very confident way to raise money.I would expect around 95p as already stated and should be over subscibed.A great way of raising money in an orderly way to ensure a full take up of the shares on offer without leaving an overhange of shares in the market.I was very negative a few months ago and not at all happy with the management of the company.But to be fair to them they have got a much more detailed plan in place than I gave them credit for.I now fully expect a re-rating of the shares to the £1.25-£1.50 range. |
Posted at 13/3/2012 20:21 by inside building The facts are that Cluff are looking for cash just as the newsflow is expected to significantly increase the share price. Current and major new investors in my opinion will want a slice of the action as it will be a very quick win/return.The book building closes tomorrow at 12 noon so do you honestly think this is not already agreed with the institutions? 25million shares at 95p is not diluting the company value. It is adding circa £24m of cash in to the coffers. This money will be invested by Cluff in developing the assets thus not only retaining the value but increasing the value of company. If they issue all 25m shares plus the 11m to Orezone then the company will have circa 170m shares in issue thus valuing the company at about £160m. There is no dilution in this scenario just more shares in issue. The reason they are not doing this post the reserves update and BFS is simple. This is how you oil the palms of institutional investors. If you do it post these events how do they show their investors how good they have been? Cluff get £24m and the institutions get 25m shares purchased at circa 95p when in three months time the whole market expects Cluff to be rerated with a successful BFS. Every one wins which is why it is done in this way. IB |
Posted at 29/10/2011 15:58 by amargosa Courtesy of SpikeyDT over on iii:Cluff Gold Chairman, Mr Algy Cluff commends the SL Government on its successful Investment Conference staged in London By: SEM Contributor on October 28, 2011. The Sierra Leone Government staged an Investment Conference in London titled "Working in Partnership" which was attended by over 100 investment professionals on Thursday 20th October. The Conference was hosted by the High Commissioner and attended by Ministers which included Dr Richard Konteh, Minister for Trade and Industry. At the Conference, Mr Algy Cluff, (in photo) Non Executive Chairman of Cluff Gold plc, praised the Government for taking the initiative to organise the Conference which was used to highlight the investment opportunities open to international investors in the Country. Below is a copy of the full speech that Mr Algy Cluff gave on the day. I would firstly like to commend the Sierra Leone High Commission, The High Commissioner himself, the Deputy High Commissioner and Florence Bangalie, the Head of Chancery for the hard work which they and others have invested in the organisation of this Conference, in this unusual location. It is particularly encouraging also for those of us engaged in business in Sierra Leone but having to raise capital outside of the country to remark that no less than six cabinet ministers have taken the trouble to attend this conference thereby confirming the whole point of the conference- that is that Sierra Leone needs foreign investment and that Sierra Leone wants foreign investment and I would add that on the record of the government's performance recently, Sierra Leone deserves foreign investment. Now Sierra Leone is of course a Commonwealth country and I am happy to offer a warm welcome to the Coalition Government's reversal of the previous Labour Government's tendency to devalue the Commonwealth in favour of anything European. There was even a rumour that they were planning to drop the word Commonwealth from the Foreign and Commonwealth Office. At no time during the fifteen years of Labour's Government did they, as far as I was concerned, exhibit at any point any enthusiasm for trade in Africa it was always aid. That neglect has contributed to the difficulties which British companies have experienced and in part has led to the dominant position now held by Chinese and Indian commercial concerns in Africa. However, this Commonwealth is a mighty organisation in concept and in reality and I believe it eases immeasurably the challenges of business and I strongly endorse the Coalition Governments recognition of this. I would also add that the reopening of the British Embassy in the Ivory Coast would seem to herald the reawakening of a new British independent Foreign policy in Africa which is most welcome to those of us who labour, (no pun intended) to advance Britain's commercial cause. Now I need to maintain a sense of proportion regarding Sierra Leone itself. It is not an investment Valhalla where nothing is faulty but then nor is anywhere else. What the country offers is the opportunity to participate in a commercial renaissance whether it be in the mining, oil, hotel, agricultural or many other sectors. Indeed I would say that Sierra Leone is the most improved destination for investment in Africa in the past five years and remember that by reason of its membership of the Commonwealth, foreign investors are operating within the framework of British Law. The Government of Sierra Leone has adopted a welcoming attitude to foreign investors typical of many African countries I have to say. That approachability is absolutely fundamental to encouraging foreign investment which is why I have invested in many African countries, but not is Cuba, Vietnam or France! I do not speak for the Sierra Leone Government but I believe they understand certainly in the minerals business that the dynamics of investment can change dramatically and drastically almost overnight and that the foreign investor must know where he stands and be able to take a ten year view. We at Cluff Gold are now contemplating an investment of over $200 million and in order for us to raise such a sum the Government needs to be our partner rather than our adversary. I have seen many examples of the latter spanning a long career in natural resources. I was involved in the early days of the exploration for Oil in the North Sea. It was not long before the Labour Government (yes them again) could not resist becoming involved beyond the fiscal boundaries by establishing a State Oil Company, the so called British National Oil Corporation, one of the biggest examples of waste of executive time in British History. One of the more lunatic tendencies was to appoint a bureaucrat to attend the operating commercial committee meeting of the Oil Companies. That I remember saying at the time it was as if prisoners of war invited the camp commandant to attend their escaping committee meetings. May I now turn to the specifics of our involvement in Sierra Leone. Gold was discovered in Baomahun near the district capital of Bo, 250 kilometres from Freetown, in the 1930's by a German company but no commercial operations resulted. In the 1980's Harry Winston the New York based, diamond magnate embarked on an exploration programme targeting diamonds. To his dismay they made not a diamond discovery but one of gold. He shortly thereafter died not cause and effect and a fifteen year battle began to establish probate to his estate. During this time one of his sons Ronald maintained the integrity of the license and indeed conducted a drilling programme which was terminated by the Civil War. In 2004, I negotiated an earn in arrangement on behalf of Cluff Gold with Mr Winston whom I have known for forty years and who is a true friend of Africa and of Sierra Leone in particular. This earn in agreement provided for Cluff Gold to assume $5 million of exploration expenditure to obtain 60% of the license. Subsequently Cluff Gold acquired the remaining 40% of the license. We have conducted active exploration in difficult terrain and as recorded in a recent press release the Baomahun License currently contains 2,070.000 ounces in the measured and indicated category and a further 800,000 ounces inferred. This has been achieved at a discovery cost of $10 per ounce of gold which is I would claim an extremely efficient application of exploration expenditure. Within days we shall be in receipt of the final economics of the project contained in the Bankable Feasibility Study which will launch our drive to secure the capital to produce a new world class gold mine capable of producing 140,000 ounces of gold per annum for up to ten years on the basis of our present knowledge of the reserves, although, clearly additional exploration may augment this figure. I must stress that there remains outstanding issues of agreement to be finalised with the Sierra Leone Government before we can initiate our fund raising and I am confident that they will be rapidly resolved. As a gesture of confidence in that judgement on our part we are to commence the development of Baomahun with a programme of road building and camp construction next month. I should on our behalf also take this opportunity to point out that we have already spend over $30 million on exploration and have and are supporting various charities in the country aimed at health and education. Most recently we have committed $325,000 to fund post graduate studies for seven students at the Tarkwa School of Mines in Ghana. The investment landscape in Africa is changing and evolving constantly. When I look back to the opening of our first mine in Zimbabwe in 1981 it is remarkable how much more sophisticated that landscape has become. It is however interesting to reflect that that money was raised in London and thirty years later we still look primarily to London for our financial support. The mining industry was then almost exclusively an Anglo-Saxon business now it is the Chinese and Indians who are challenging that dominance and the era of the African entrepreneur has dawned and very welcome it is too. We in Europe seem determined to place ourselves at a disadvantage with the Bribery Act being the latest shackle to undermine our competitive edge. There is something infuriating about this assumption that we are all intent on behaving badly unless legislation is in place to prevent us doing so. Some years ago (outside the statute of limitations) I approved the payment of various invoices to London Hospitals for an African Minister who was seriously ill with cancer. Was that an act of compassion or a bribe? No one knows such is the moral muddle the busy bodies have devised for us. I have been involved as a businessman in Africa for longer I am sure that anyone in this room and it may surprise you to know that the only attempt to bribe me was by an Englishman not an African. The other issue which all foreign investors are now addressing is the concept of local empowerment. This is a complicated matter and it is crucial for Governments to get the balance between two apparently conflicting aspirations right. In my opinion the simplest methodology for this is through the Stock Markets. I respectfully commend African Governments to examine the benefits the stock market can provide and I believe listing for foreign mining companies (which are producing) on the local markets would have many advantages including local participation but also it would facilitate the movement of capital in and out of Africa and by definition the disciplines of corporate governance by which public companies have to abide. So the scene is set in Sierra Leone for a period of sustained growth which will result from a partnership between the international private sector and the Sierra Leone Government maybe an African version of Hong Kong or Singapore. After all Sierra Leone people have the intelligence required and the raw materials which Hong Kong and Singapore don't. Thank you |
Posted at 14/7/2011 15:16 by worsleybird How long will eurozone concerns hit markets?Thu, 14/07/2011 - 12:21 | Esther Armstrong It is hard to believe that it's been over a year since the initial Greek bail-out was agreed. On 2 May 2010, the Greek government secured funding of 45 billion from the other eurozone nations and the International Monetary Fund (IMF) and were assured more funds could be available later. At the time, European officials felt they had taken the situation in hand and stemmed the spectre of contagion that was threatening the region. Even back then markets were unconvinced by the aid package and by the actions of European policymakers as a whole. In the last year, sentiment surrounding the eurozone has oscillated between near-panic and flagrant disregard; investors have experienced periods of relative calm and confidence in the region, buoyed by a positive data stream coming out of the core countries. But this only serves to provoke a more extreme reaction when debt concerns are hurled to the top of the news agenda again. In light of its potential for long-lasting impact on markets, experts have some firm views on what to expect next. How long will eurozone concerns hinder markets? Most analysts agree the eurozone debt crisis is set to continue for some time yet. This is chiefly due to the maturity dates on bonds and the subsequent fund raising governments have to do, which leaves them at the mercy of the market. If there is little appetite for the country's debt, yields are driven up and rating agencies could decide to downgrade the government's bonds. This reinforces investor's doubt and creates something of a vicious cycle. Will Hedden, sales analyst at IG Index, doesn't see an end to the crisis in sight: "The market has done its normal thing of chasing the weakest link. It skipped Spain and has gone to Italy and I think it will have to go back to Spain at some point, so will go on for quite a few months yet. "The problem has brewed up over many, many years. It has been going on so long and is such a big issue across so many places it is not surprising it has taken so long to find a solution." Jennifer McKeown, senior European economist at Capital Economics, agrees with Hedden: "The effect on markets is going to continue for a very long time. There is a chance things ease off a bit once another deal is struck for Greece, assuming it is struck." But she warns much depends on the type of deal agreed and adds that if private bond holders end up losing, yields could be driven higher in Portugal and the other peripheral nations. It seems clear investors should prepare themselves for a protracted resolution to the region's problems and shouldn't depend upon its influence on the markets diminishing any time soon. For more on the crisis, read: Eurozone woes offer little hope for small investors. How can investors make a play on it? Since the market fluctuations in response to the eurozone crisis are likely to be ongoing, investors would be well advised to try and make the best of the situation. Hedden, though, advises against making rushed decisions as news breaks: "The first thing is watch the way the markets move. It's a case of not jumping in at the first sign of a breaking announcement. On Tuesday, we had Italian banks sold off in the morning, then they finished up, and it's ridiculous for blue chips to be moving in such ranges." Another factor to think about is the assets that tend to do well during times of risk aversion. Hedden continues: "You can step outside the eurozone and look at gold, which is moving in tandem with this news. Safe havens are going to continue to benefit - the Swiss franc is another of these." Alejandro Zambrano, trading analyst at DailyFX, agrees with Hedden's assessment of safe-haven assets. He thinks the increased willingness of central banks and governments to limit the potential collapse of the eurozone and spur world GDP growth through quantitative easing will lead to increases in the price of gold and the Swiss franc. "Increases will be motivated by potential inflation due to the quantitative easing and general flight from risky assets to what is considered safe," he says, "Gold is expected to trade to $1,700 as long as price trades above $1,475 per ounce and USD/CHF is expected to reach 0.79 as long a price trades below 0.86." What risks lie ahead and which country is next? The chief concern in the mind of investors and bondholders is whether the contagion will continue to spread. Opinions are split on which country could be next, with some experts focused on the threat posed by Spain due to the sheer size of its economy, while others think the focus is likely to shift to Ireland next. A lot will depend on whether governments can persuade markets of their intentions to cut spending and sort out their fiscal deficits, and whether their populations will put up with the impending austerity drives. McKeown says: "The most obvious country to come next would be Portugal, perhaps followed by Ireland. The less mainstream view would be Italy and perhaps Spain would be the next one to go. They are so big that it would bring a whole new dynamic to the crisis and that is where you can start to see the eurozone falling apart. It would be extremely difficult to pass aid for these bigger countries." Hedden thinks Spain could well be under fire next, but points out that the political situation within the country itself can have a big impact: "It seemed we skipped Spain and went straight on to Italy. "There is a lot of attention focused on Belgium too, as there are all these political hurdles. Italian Prime Minister Berlusconi has his own issues fighting various opponents and then there are problems politically in Spain, which is fighting very high unemployment." But Zambrano says Ireland is due to feel the heat again. "The interest rate premium Ireland pays to borrow money for two years compared with Germany is increasing much faster than Portugal. Ireland is now paying 17% more than Germany if they issue two-year bonds. Portugal pays a premium of about 14%," he explains. On Tuesday, Moody's downgraded the status of Ireland's debt from Baa3 to Ba1, which took it to junk status and prompted criticism from the Irish government. It also added fuel to the fire from eurozone policymakers that the rating agencies have too much power. Ted Scott, director of global strategy at F&C, says: "In my view the rating is correct and recognises reality. After all, if two-year bonds are yielding over 16% they can hardly be deemed to be investment grade. It is a further wake-up call in the light of contagion spreading to Italy this week to get their act together and provide a workable proposal to the crisis that addresses the vital issue of solvency." What can policymakers do? All the experts agree that policymakers need to present a united front if they are to convince markets the situation is in hand. Hedden says: "Starting to agree and starting to take a little bit more responsibility rather than blaming the ratings agencies for effectively doing their job would help. The central banks and policymakers are looking to blame the rating agencies, but it is more complex than that." McKeown puts the onus on the European Central Bank to bring national governments together. "The European Central Bank can agree to the kind of schemes that other policymakers are coming up with for Greece. It needs to get behind these schemes and allow them to happen. The alternative could well be a banking crisis and financial collapse around the region." But she admits individual governments need to step up to the plate: "They need to take some big steps towards bringing public finances into better shape. They need to be very long term in their plans. It can't take place over only a couple of years as it is too damaging. But if they can convince the markets they are headed in the right direction then they can perhaps bring down their borrowing costs over time." |
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