Business News: Cowen’s Party Likely Loses Irish Special Election to Sinn Fein

Business News: Cowen’s Party Likely Loses Irish Special Election to Sinn Fein

Cowen’s Party Likely Loses Irish Special Election to Sinn Fein

Posted: 26 Nov 2010 04:41 AM PST

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By Colm Heatley

Nov. 26 (Bloomberg) -- Irish Prime Minister Brian Cowen’s party likely lost a special election for a vacant parliamentary seat as talks continue on a rescue package of loans for the country, according to a first tally of votes.

Counting of ballots began at 9 a.m. after the vote in Donegal yesterday and early results suggest Cowen’s Fianna Fail will lose, RTE said today. The candidate for Sinn Fein, the nationalist party, took 40 percent of first preferences to Fianna Fail’s 21 percent, the national broadcaster said.

While a loss for Cowen reduces his majority in parliament to two, the premier probably will still be able to pass the 2011 budget. Cowen is racing to conclude talks with the European Union and the International Monetary Fund on an 85 billion-euro ($113 billion) aid package as his governing coalition crumbles.

The two biggest opposition parties “both accept the need to get the current deficit down,” Alan Dukes, a former finance minister who led the opposition Fine Gael party from 1987 to 1990, said in an interview late yesterday. He said the parties have “no option” other than to allow the budget to pass.

German Finance Minister Wolfgang Schaeuble said today he hopes that bailout talks will be concluded by early next week.

Bookmaker Paddy Power Plc. already paid out on Sinn Fein winning the Donegal Southwest seat, the Dublin-based company said in a statement today. Final results are due later today.

Election Looms

Cowen’s junior partner in government, the Green Party, said Nov. 22 it is pulling out of the coalition, forcing a national election to be held early next year. Two independent lawmakers, on whom the government relies for support, said their backing for the budget isn’t guaranteed.

The most northerly county in Ireland, Donegal is adjacent to Northern Ireland and 140 miles from Dublin. Known as the “Forgotten County,” it accounts for less than 4 percent of Ireland’s population. The Donegal Southwest seat was vacated last year when the lawmaker resigned.

Fianna Fail had 19 percent support prior to this week’s election, according to a poll for Paddy Power published on Nov. 17. Sinn Fein, led by Gerry Adams, was at 40 percent, according to the poll of 510 people carried out between Nov. 12 and Nov. 16. No margin of error was given.

--Editors: Dara Doyle, Rodney Jefferson

To contact the reporter on this story: Colm Heatley in Belfast at cheatley@bloomberg.net

To contact the editor responsible for this story: Dara Doyle at ddoyle1@bloomberg.net

Irish Relief Fleeting as ‘Day of Reckoning’ Nears: Euro Credit

Posted: 26 Nov 2010 04:30 AM PST

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By Paul Dobson

Nov. 26 (Bloomberg) -- Borrowing costs for Europe’s most indebted nations are at record highs as Ireland’s capitulation in accepting a bailout of its banking industry stokes concern that other countries also will have to seek aid.

The average yield investors demand to hold 10-year debt from Greece, Ireland, Portugal, Spain and Italy reached 7.56 percent today, a euro-era record. The average premium investors demand to hold those securities instead of German bunds widened to 488 basis points, the highest level of 2010. The average cost of insuring against default by the five nations using credit- default swaps reached a record 517 basis points on Nov. 23.

“It’s no longer taboo to speak about a restructuring,” said Johannes Jooste, a portfolio strategist at Bank of America Corp.’s Merrill Lynch Global Wealth Management in London, which oversees about $1.4 trillion for clients. “The fact that bond yields continue to rise and put pressure on countries that have to fund from the market makes investors less and less confident, and it’s bringing forward the day of reckoning.”

The Nov. 22 relief rally after Irish Prime Minister Brian Cowen conceded that the nation needed financial support proved transient. Irish 10-year bond yields fell 4 basis points, before jumping 100 basis points as of 11 a.m. today, exceeding 9 percent for the first time since 1995. The euro’s respite was more fleeting; the bailout inspired a 0.8 percent gain for the currency before it slumped to a two-month low. It fell 0.9 percent to $1.3238 today.

Volatile Market

“When Ireland accepted help, the general feeling in the market was that this could restore some calm; that hasn’t been the case,” said Michiel de Bruin, who oversees about $35 billion as head of European government debt at F&C Netherlands in Amsterdam. “Authorities should be doing their utmost to calm the situation.”

Analysts at Morgan Stanley said in a Nov. 11 report that any move by Ireland to use the European Financial Stability Facility would boost the euro and be a “circuit breaker” for the European sovereign debt crisis. While Ireland has enough money to pay its debts until the middle of next year, it has requested a bailout from the European Union and International Monetary Fund amid concern the cost of rescuing its banks would overwhelm government finances.

Portuguese Finance Minister Fernando Teixeira dos Santos said in an interview published today that EU governments can’t impose a bailout on his country.

A majority of euro region officials and the European Central Bank are putting pressure on Portugal to accept aid that helps stop contagion spreading to Spain, the Financial Times Deutschland reported today. German government spokesman Steffen Seibert said the nation isn’t pushing Portugal to seek aid. An official at the office of Portuguese Prime Minister Jose Socrates also denied the report.

Greek Kickoff

The most recent leg of the debt crisis that started a year ago in Greece kicked off after EU leaders agreed Oct. 29 to consider German Chancellor Angela Merkel’s demand for a crisis- resolution mechanism that forces bondholders to share the cost of future bailouts. The Stoxx 600 Banks Index of European shares fell almost 8.8 percent in the past month.

Adding to the pressure is the ECB’s push to scale back liquidity support for banks.

“This tough stance is reigniting a euro debt crisis,” Greg Gibbs, a Sydney-based currency strategist at Royal Bank of Scotland Group Plc, wrote in a research report dated Nov. 23. “The recent problems in Europe may relate to fears that weak banks in the periphery will lose access to cheap funding from the ECB, and their deteriorating position will in turn put more pressure on the sovereigns.”

European Fund

Greece agreed to a 110 billion-euro ($145 billion) rescue program in April before the creation of the 750 billion-euro European Financial Stability Facility in May as a backstop for the common currency. Cowen said this week a bailout of 85 billion euros had been discussed for Ireland.

Policy makers must head off a “spreading disaster” in the euro region, said Mohamed El-Erian, chief executive officer of Newport Beach, California-based Pacific Investment Management Co. “The comforting statements issued by European ministers in recent days must be urgently translated into meaningful actions,” he wrote earlier this week in an article for the Financial Times.

Analysts also say more needs to be done. Portugal should request preemptive steps to stem the widening yield spreads between high-deficit nations’ debt and German bunds, according to WestLB AG.

‘Huge Haircuts’

Bondholders of European banks need to accept “huge haircuts” on their assets, said currency-trading firm FXPro. Germany may pull out of the euro to allow the currency to devalue, wrote Graham Turner, chief economist at GFC Economics, a London-based consulting firm.

“Time is of the essence,” a team of London-based analysts at Nomura International Plc led by Nick Firoozye wrote in a Nov. 24 investor note. “The continued confusing political rhetoric is driving investors out of Europe. Once the euro area issuance cycle gets under way in 2011, unless many of the issues surrounding collective action clauses, crisis resolution mechanisms and their timing have been resolved, policy makers could lose the battle.”

--Editors: Mark Gilbert, Tim Quinson

To contact the reporter on this story: Paul Dobson in London at pdobson2@bloomberg.net.

To contact the editor responsible for this story: Daniel Tilles at dtilles@bloomberg.net

Stocks, Futures Fall on Korea, Europe Debt Woes; Dollar Gains

Posted: 26 Nov 2010 04:22 AM PST

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By Justin Carrigan

Nov. 26 (Bloomberg) -- Stocks and U.S. index futures dropped as tensions in Korea mounted and concern deepened over Europe’s debt woes. The cost of insuring against defaults by Portugal, Spain and Ireland rose to records and the dollar strengthened.

The MSCI World Index of stocks slipped 0.9 percent at 6:46 a.m. in New York, while futures on the Standard & Poor’s 500 Index lost 1 percent. South Korea’s Kospi Index fell 1.3 percent and Hungary’s BUX Index slid 3.7 percent. The extra yield investors demand to hold Spanish 10-year bonds over benchmark German bunds climbed to 264 basis points, a euro-era record. The dollar appreciated 1.1 percent to $1.3227 per euro, a two-month high. The S&P GSCI index of 24 commodities declined 0.8 percent.

More than $1.8 trillion has been wiped off the value of global equities in the past three weeks as traders speculated Ireland’s debt crisis will spread to other European Union countries, according to data compiled by Bloomberg. European Central Bank council member Erkki Liikanen said in a speech published today that policy makers may keep support measures in place for longer “if required.” South Korea said the North may have conducted artillery drills, after its neighbor warned of retaliation to any encroachment of its sovereignty.

“Global markets continue to trade nervously and without clear conviction as the EU sovereign and Korean crisis fears remained front-page news,” Kit Juckes, head of foreign-exchange research at Societe Generale AG in London, wrote in a report. Korea keeps “the risk-aversion train rolling along.”

Santander, Bank of Ireland

The Stoxx Europe 600 Index slumped 1.2 percent as more than five companies fell for every one that gained. Spanish banks led the decline, sending the IBEX 35 index down 2.6 percent. Banco Santander SA, Spain’s biggest lender, dropped 4.5 percent, while Bankinter SA sank 4.1 percent. Bank of Ireland Plc slid for a fifth day, losing 3.5 percent. BNP Paribas SA, France’s largest lender, slipped 4.5 percent. Rio Tinto Group lost 3.5 percent.

Hungarian stocks sank for a second day, with the benchmark BUX Index posting the steepest drop worldwide, after the government said citizens must move their privately managed pension assets to the state or lose 70 percent of their pension claim. Economy Minister Gyorgy Matolcsy announced the policy on Nov. 24 as the most indebted eastern member of the EU steps up efforts to reduce the budget deficit.

The MSCI Asia Pacific Index fell 1.2 percent to its lowest level in a month. Hana Financial Group Inc., South Korea’s fourth-largest financial company, slumped 4.1 percent. China’s Shanghai Composite Index dropped 0.9 percent after Shanghai Securities News reported the government may cut its target for new lending next year. Industrial & Commercial Bank of China Ltd. lost 1.6 percent.

Black Friday

The decline in U.S. futures indicated the S&P 500 may pare some of its 1.5 percent rally on Nov. 24. U.S. markets were closed yesterday for the Thanksgiving holiday. Retailers and shoppers are preparing for Black Friday, the biggest shopping day of the year and a bellwether for the holiday season. Analysts’ estimates for holiday sales vary from little changed to increases of as much as 4.5 percent.

The yield on the Spanish 10-year bond jumped five basis points to 5.26 percent, bringing its increase since Nov. 16 to 72 basis points. Credit-default swaps on Spain climbed 21 basis points to 320.5, while contracts on Portugal soared 31.5 basis points to 507.5 and those on Ireland increased 19 basis points to 599.5.

Dollar Gain

The yield on the U.S. 10-year Treasury note dropped five basis points to 2.87 percent. The Dollar Index, which tracks the currency against those of six trading partners, jumped 0.8 percent to 80.327, set for its third consecutive weekly gain, the longest sequence of gains since May 14. The euro depreciated 0.6 percent to 111 yen, and fell 0.1 percent in a basket of 10 currencies, according to Bloomberg Correlation-Weighted Currency Indexes.

Copper for delivery in three months dropped 1.6 percent to $8,210 a metric ton on the London Metal Exchange, declining for the first time in three days. Aluminum, nickel and zinc also retreated. Gold fell 1 percent to $1,361.70 an ounce and silver slid 3.2 percent to $26.68 an ounce. Brent crude for January settlement fell 1.1 percent to $85.16 a barrel on the London- based ICE Futures Europe exchange.

--With assistance from Michael Patterson, David Merritt, Daniel Tilles, Raj Rajendran and Andrew Reierson in London. Editors: Justin Carrigan, Stuart Wallace

To contact the reporter on this story: Justin Carrigan in London at jcarrigan@bloomberg.net

To contact the editor responsible for this story: Stuart Wallace at swallace6@bloomberg.net

Zoomlion Said to Win Hong Kong Share Sale Approval

Posted: 26 Nov 2010 04:10 AM PST

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By Fox Hu

(Updates with closing share price in sixth paragraph.)

Nov. 26 (Bloomberg) -- Changsha Zoomlion Heavy Industry Science & Technology Development Co. won approval from the Hong Kong stock exchange for a share sale that may raise more than $1 billion, two people familiar with the matter said.

The company, which makes cranes, cement mixers and fire trucks, aims to start trading in Hong Kong as early as next month, said the people, who declined to be identified before an announcement. JPMorgan Chase & Co. and Morgan Stanley are among banks managing the offering, the people said.

Zoomlion, based in Changsha, central China, has jumped 37 percent this year in Shenzhen trading as the nation’s spending on new roads, factories and houses stoke demand for construction equipment. The company plans to pursue a Hong Kong listing after Bluestar Adisseo Nutrition Group and China Datang Corp. withdrew or delayed sales set to raise a combined total of as much as $2.6 billion amid falling share prices.

“The IPO frenzy is losing momentum,” said Michiya Tomita, a Hong Kong-based fund manager for Mitsubishi UFJ Asset Management Co., which oversees $65 billion globally. “The market is concerned about the Korea peninsula, China’s tightening and Europe’s debt problem,”

Zhan Chunxin, Zoomlion’s chairman, wasn’t immediately available to comment to calls made to his office in Changsha city, Hunan province. Scott Sapp, a spokesman for Hong Kong Exchanges & Clearing Ltd., declined to comment.

Zoomlion fell 1.9 percent to 14.23 yuan at the 3 p.m. close of trading in Shenzhen. The company has received approval from the China Securities Regulatory Commission to sell shares in Hong Kong, according to a Nov. 21 Shenzhen Stock Exchange filing.

Bluestar, Datang

Bluestar Adisseo, the animal-nutrition producer backed by Blackstone Group LP, withdrew its IPO this week because of “continued and excessive” market volatility. Datang delayed a roadshow for a share sale of its renewable-energy unit because of market conditions, said two people with knowledge of the plan who declined to be identified because the information is confidential.

The benchmark Hang Seng Index has slumped 8.4 percent from Nov. 8, its highest this year, after China stepped up measures to contain inflation and Ireland accepted a European Union-led bailout. Hong Kong IPOs have raised a record $44 billion this year, with companies including Agricultural Bank of China Ltd. and AIA Group Ltd. selling stock, according to data compiled by Bloomberg that exclude overallotment options.

Sateri, Greatview

Sateri Holdings Ltd. and Greatview Aseptic Packaging Co. said at separate media briefings in Hong Kong this week that they are pushing ahead with IPO plans. Sateri, a Chinese cellulose maker, is seeking $600 million and plans to price its stock on Dec. 2 and start trading on Dec. 8, according to its prospectus. Greatview, a beverage-packaging company based in Beijing, is seeking about $214 million.

Zoomlion, which generated more than 90 percent of sales in China last year, boosted third-quarter net income 45 percent to 924 million yuan. The company has factories in Shanghai, Hunan, Shaanxi and Guangdong in China, as well as in Milan.

Sany Heavy Equipment International Holdings Co., which makes cranes and construction equipment, has risen 26 percent in Hong Kong this year, compared with a 4.6 percent gain for the Hang Seng Index. The company trades at about 29 times estimated earnings for next year.

China’s urban fixed-asset investment rose 24.4 percent in the first 10 months of 2010 from a year earlier, according to the nation’s statistics bureau.

--With assistance from Feifei Shen in Beijing. Editors: Neil Denslow, Tan Hwee Ann

To contact the reporter on this story: Fox Hu in Hong Kong at fhu7@bloomberg.net

To contact the editor responsible for this story: Darren Boey at dboey@bloomberg.net

Novartis, Teva May Get Sales Boost From New EU Rules

Posted: 26 Nov 2010 03:58 AM PST

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By Eva von Schaper and Naomi Kresge

(Updates with release of guidelines in first, second paragraphs.)

Nov. 26 (Bloomberg) -- Europe’s drug regulator set out guidelines for copying some of the most expensive biotechnology medicines, giving companies such as Novartis AG and Teva Pharmaceutical Industries Ltd. access to a $36.4 billion market.

The European Medicines Agency’s draft regulation, posted today on the agency’s website, aims to clarify how drugmakers can copy and sell so-called monoclonal antibodies after they lose patent protection. The document is open to public comments until May 31, the London-based agency said.

Three important monoclonal antibody treatments are slated to lose patent protection by 2015: Roche Holding AG’s Herceptin for cancer, Biogen Idec Inc. and Elan Corp.’s multiple sclerosis drug Tysabri and Remicade for rheumatoid arthritis, sold by Johnson & Johnson and Merck & Co. Together, the medicines had sales of more than $10 billion last year.

“Looking out five to ten years, I see this as a multi- billion-dollar opportunity,” said Jeff George, who heads Novartis’s generic-drug unit, Sandoz. Novartis is working on eight to 10 copies of biological drugs, he said.

Antibodies are part of the immune system, recognizing and fighting infection and other foreign substances in the human body. Monoclonal antibodies are produced to closely resemble human ones.

New Biosimilars

Monoclonal antibody copies would be a new type of biosimilar, a copy of a medicine designed to mimic substances fond in the body such as hormones. Conventional generic drugs are copies of treatments for high blood pressure or pain, and often don’t resemble biological compounds. Biosimilars have been sold in Europe since 2005. Companies use genetically engineered cells to make biosimilars, and conventional generics are manufactured by chemical reactions in large vats.

“Monoclonal antibodies are currently still perceived by many to be a bigger challenge for biosimilar development” than drugs like generic epoetin, an anemia treatment, according to Elmar Kraus, an analyst at DZ Bank in Frankfurt.

The market for the antibodies was valued at $36.4 billion in 2009 and is forecast to increase to $62.7 billion in 2015, according to Datamonitor Plc, a London-based health information firm.

No generic monoclonal antibodies have been approved either in Europe or in the U.S. Copies of antibodies will reach those markets between 2014 and 2016, according to Aaron Gal, an analyst at Sanford C. Bernstein & Co. in New York.

“There is a limited number of companies going into this business, because it’s not like a normal generic,” according to the European Medicines Agency’s Executive Director Thomas Loenngren, who spoke in a Nov. 3 interview.

Rituxan Copy

Teva, based in Petah Tikva, Israel, is developing a copy of Roche’s Rituxan, the second-biggest-selling cancer drug. Teva in May began recruiting patients with rheumatoid arthritis for a clinical trial comparing its biosimilar copy, TL011, with Rituxan, sold outside the U.S. as MabThera, according to the U.S. National Institutes of Health website. Teva in September expanded the tests to include patients with non-Hodgkin’s lymphoma.

Rituxan has patent protection in the U.S. until 2018 and in the rest of the world through 2013, Nina Schwab, a Roche spokeswoman, said in a telephone interview.

Novartis is focused on monoclonal antibodies, George said. He declined to provide details on any projects, citing competitive reasons.

Novartis’s Focus

“It is safe to assume we are focused on the most significant opportunities in that space,” George said.

Five products account for 75 percent of monoclonal antibody sales: Roche’s Avastin, Herceptin, Remicade, Rituxan and Abbott Laboratories’ arthritis drug Humira. Each of the so-called “Big Five” had at least $4 billion in sales annually.

There are about 30 branded monoclonal antibodies approved in Europe, and this regulation will likely affect 10 to 15 originator companies, Loenngren said in the interview.

Generics of monoclonal antibodies may not be as quick to gain ground as copies of more traditional, small molecule medicines, such as Merck & Co.’s Cozaar and Hyzaar, two blood pressure medicines. A small molecule generic typically erodes about half to the branded drug’s sales volume within the first year, while monoclonal antibody drugs are expected to lose less than 10 percent in that time, according to Datamonitor.

Generic Competition

Merck lost exclusive rights this year to both of the drugs, which had combined 2009 sales of $3.6 billion. Sales of the two drugs declined to $423 million, from $861 million in the third quarter of last year.

The European regulator hasn’t received any applications for antibody drugs so far, according to Loenngren. The EMA has had “contacts, scientific advice and discussions” with companies, he said.

The guidelines will not be a strict rulebook, according to Ameet Malik, who heads the biopharmaceutical unit at Sandoz.

“The exact specification is going to vary by company and by molecule,” Malik said. “Companies may take different approaches.”

--Editors: Kristen Hallam, Carey Sargent

To contact the reporters on this story: Eva von Schaper in Munich at evonschaper@bloomberg.net; Naomi Kresge in Berlin at nkresge@bloomberg.net

To contact the editor responsible for this story: Phil Serafino at pserafino@bloomberg.net

Coal India Studying Five Overseas Mine Acquisitions

Posted: 26 Nov 2010 03:38 AM PST

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By Rakteem Katakey and Rajesh Kumar Singh

(Updates with closing share price in eighth paragraph.)

Nov. 26 (Bloomberg) -- Coal India Ltd., the world’s largest producer of the fuel, is studying the acquisition of five mines in the U.S., Australia and Indonesia to meet the country’s demand for the fuel, Chairman Partha Bhattacharyya said.

The state-owned company is examining a mine in Australia owned by Peabody Energy Corp., one in the U.S. owned by Massey Energy Co. and another in Indonesia, Bhattacharyya said, declining to name the third company. While Coal India hasn’t started due diligence on two more mines in Australia, it may appoint banks soon to evaluate offers, he said.

“We are narrowing the gap of valuations with Peabody,” Bhattacharyya, 59, said in an interview in New Delhi yesterday. “We would like to invest because there are companies which want money for their mines or a market for their coal,” he said. “We have the money and there is a big market here.”

The Kolkata-based mining company has 380.5 billion rupees ($8.3 billion) in cash for acquisitions as consumption rises in Asia’s second-biggest energy consumer. India’s annual coal demand will exceed output by 100 million metric tons in four years and Coal India aims to meet half the shortfall from overseas mines, the chairman said.

“It’s absolutely critical not just for the company but also for the country,” said Jagannadham Thunuguntla, chief strategist at SMC Global Securities Ltd. in New Delhi. “From a macro-economic standpoint, it is very important for India to have control over natural resources and Coal India is a trump card for the government.”

Indonesia Venture

Bhattacharyya said Coal India may also begin talks with the Indonesian government in January on a proposed venture with state-owned miner PT Tambang Batubara Bukit Asam.

At the last meeting of an Indonesia-India working group “we had suggested Bukit Asam is a government-owned company, and if certain blocks can be operated jointly by forming a venture,” he said. “They have said in the next meeting they will bring up something. That’s likely to be in January.”

Coal India fell 0.2 percent to 312.70 rupees at the close in Mumbai trading as Indian stocks declined, dragging the benchmark Sensitive Index 0.9 percent lower. The stock has gained 28 percent since the government sold a 10 percent stake in the company at 245 rupees a share last month in India’s largest initial share sale.

Of 20 analysts that cover Coal India, 16 recommend buying the stock and one recommends selling.

IPO, Output

Prime Minister Manmohan Singh raised 152 billion rupees from the IPO in October, offering the stock at a discount to global peers. India’s economy grew at the fastest pace in more than two years in the three months ended June 30, spurring energy demand.

Coal India and its units, which account for 82 percent of the nation’s production of the fuel, posted a 29 percent increase in net income to 40.2 billion rupees in the six months ended Sept. 30, the miner said Nov. 23. The miner has 17.1 billion rupees of loans outstanding, payable through 2044, according to Bloomberg data.

“Coal asset prices may go up in future because of rising demand from India and environmental constraints, which are likely to hamper production,” said K.K. Mital, a New Delhi- based fund manager with Globe Capital Market Ltd. “So, now is the right time for Coal India to make these acquisitions, if they come at the right price.”

India’s government has pledged to provide electricity nationwide by 2012 and needs to increase installed generation capacity to 200,000 megawatts to sustain economic growth, according to the power ministry. More than half of the current capacity of 167,278 megawatts is fueled by coal.

Coal demand in India may more than triple in the next two decades to 2 billion metric tons, Coal Minister Sriprakash Jaiswal said Sept 24. India produces 530 million tons of coal a year and imports about 67 million tons, the minister said.

Coal India has proven reserves of 52.55 billion tons, of which 21.75 billion is extractable, according to the IPO document.

--Editors: Amit Prakash, John Chacko.

To contact the reporters on this story: Rakteem Katakey in New Delhi at rkatakey@bloomberg.net; Rajesh Kumar Singh in New Delhi at rsingh133@bloomberg.net.

To contact the editor responsible for this story: Amit Prakash at aprakash1@bloomberg.net.

Ireland Races to Secure Weekend Aid Deal Amid Bank Debt Concern

Posted: 26 Nov 2010 03:35 AM PST

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By Simon Kennedy and Dara Doyle

Nov. 26 (Bloomberg) -- Irish officials raced to complete a deal for an international aid package before financial markets reopen next week with talks centering on the status of bondholders in Ireland’s largest banks.

Euro-area finance ministers plan to finalize an agreement on Nov. 28, a European Union official said on condition of anonymity. Senior bonds of Allied Irish Banks Plc tumbled today amid concern holders will be forced to share in the 85 billion- euro ($113 billion) cost of rescuing Ireland’s financial system.

The need for speed in securing a deal for Ireland is growing amid an outflow of funds from its banks and as investors dump the government debt of other European countries on concern they too will be infected by the sovereign debt crisis. The average yield investors demand to hold 10-year debt from Greece, Ireland, Portugal, Spain and Italy today reached a euro-era record of 7.56 percent.

“A move by Ireland to hit senior bankholders will raise systemic risk across the euro area,” Harvinder Sian, a senior fixed-income strategist at Royal Bank of Scotland Group Plc in London, said in a note to clients today. “The countries then most at risk are Portugal and in particular Spain.”

Aid negotiators from the EU and International Monetary Fund are taking legal advice on how senior bondholders can share the cost of Ireland’s bailout without triggering lawsuits, the Irish Times reported today, without saying where it got the information.

Allied Irish’s 750 million euros of 5.625 percent senior notes due 2014 plunged 6 cents on the euro to 71 cents, an 8 percent decline, according to composite prices on Bloomberg.

‘Similar Problems’

While deposit outflows have “stabilized” in recent weeks, Anglo Irish Bank Corp. Chairman Alan Dukes told Bloomberg Television yesterday that the nationalized lender lost about 12 billion euros of deposits this year and that “other banks are having similar problems.” Deposits at Allied Irish and Bank of Ireland Plc have fallen by a combined 22 billion euros since the end of June, according to estimates from Emer Lang, an analyst at Dublin-based securities firm Davy.

With German Finance Minister Wolfgang Schaeuble saying today he expected the Irish talks will be concluded by the beginning of next week, Portugal’s government denied a report in the Financial Times Deutschland that it’s being forced to seek aid as well. European Commission President Jose Barroso said in Paris today that “it’s completely wrong” to suggest the commission has lobbied Portugal.

The German government “isn’t pressing anybody to seek funding,” Steffen Seibert, Chancellor Angela Merkel’s chief spokesman, told reporters in Berlin.

‘Push and Force’

“There are those who think that the best way to preserve the stability of the euro is to push and force the countries that at this moment have been more under the floodlight to that aid,” Portuguese Finance Minister Fernando Teixeira dos Santos told Jornal de Noticias in an interview published today. “But that is not the vision or the political option of the countries that are involved.”

Ireland’s woes are having political repercussions too. Prime Minister Brian Cowen’s party lost a special election for a vacant parliamentary seat, according to Paddy Power Plc. The bookmaker paid out on Sinn Fein, the nationalist party, winning the seat, the Dublin-based company said in a statement. That would reduce Cowen’s majority in parliament to two.

--With assistance from Joe Brennan in Dublin, Mark Deen in Paris, John Glover in London, Joao Lima in Lisbon and Patrick Donahue in Berlin. Editors: Alan Crawford, Fergal O’Brien

To contact the reporters on this story: Simon Kennedy in London at skennedy4@bloomberg.net; Dara Doyle in Dublin at ddoyle1@bloomberg.net.

To contact the editor responsible for this story: John Fraher at jfraher@bloomberg.net