Promissory notes statement - 4pm

darkman2

Just seen this tweet.

Tony Connelly ‏ @tconnellyRTE Reply Retweet Favorite · Open
Michael Noonan to make a statement on Anglo promissory notes shortly before flying to Copenhagen for informal #ecofin meeting

Statement to be made in the Dail

http://asx.heanet.ie/oireachtas/dail_broadband.asx

Lou.m

Noonan to make a statement regarding promissory notes todayin parliment..at 4pm ..

When it comes it can be foundhere

http://www.politics.ie/news/noonan-make-statement-dail-4-06pm-today-promissory-note-221.html

Basically we sign up to more debt oer a longer time...we sign uptomoredebt ...what Enda gave out to us for doing andgoingmad!!

Scofflaw

Substance of the announcement is that the cash payment - which would have used troika funding - has been replaced by a long-term government bond. Or, to put it another way, the IOU falling due is being met with a different kind of IOU.

The advantage in this is saving the troika cash for current spending and to extend the timeframe before we have to either return to the markets or extend/replace the current troika bailout.

cordially,
Scofflaw

later12

Just got the end of the statement and saw that the Ceann Comhairle was disallowing further questions on the statement and the business of the house was resuming. And what was the business of the house after this important announcement?



Can someone fill in the blanks? Nothing online yet

darkman2

lol....no q&a because of a question about "Sheep-worrying by packs of dogs on the Cooley Peninsula" Idiots.


2 questions - interest rate and length of bond not answered.

Lou.m

OUTRAGED...Ceann Comhairle decides after Noonan speach that the Dáil should talk about sheep instead of questions about what is CLEARLY a matter of public interest!!..Does he have FG ties?? Or is he just incompetent....either way he should go.....remember this you TDS WANTED to question this....but the Ceann Comhairle would not let them..he decided sheep worrying was more important..this decision is potentially and damaging as the BANK BAILOUT...andthe Dáil is forced to talk about SHEEP!.....Ceann Comhairle you are a moronic disgrace!

later12

Lou.m wrote: »

OUTRAGED...Ceann Comhairle decides after Noonan speach that the Dáil should talk about sheep instead of questions about what is CLEARLY a matter of public interest!!..Does he have FG ties??

He's a Fine Gael TD

this decision is potentially and damaging as the BANK BAILOUT.

No, it's a lot of money, but it's not really of that order. It's about €3 billion.

I know it's quite frustrating, but I guess there are rules of the Oireachtas. I'm not really sure who they benefit in this context.

Anyway, there might be question time later.

noodler

darkman2 wrote: »

lol....no q&a because of a question about "Sheep-worrying by packs of dogs on the Cooley Peninsula" Idiots.


2 questions - interest rate and length of bond not answered.

Does anyone understand BoI's (and NAMA in the interim) role in this?

Lou.m

later12 wrote: »

He's a Fine Gael TD


No, it's a lot of money, but it's not really of that order. It's about €3 billion.

I meant really in terms of strategy .....clearly this is the path we are taking debt referral...this needs to be questioned and channelled

And Ty for clarifying his position ..i should have been aware

Scofflaw

noodler wrote: »

Does anyone understand BoI's (and NAMA in the interim) role in this?

It looks to me that they're funding the bond - in other words, providing the money, although BOI would be getting that money form elsewhere, most likely the ECB, while NAMA has the money in hand.

cordially,
Scofflaw

later12

noodler wrote: »

Does anyone understand BoI's (and NAMA in the interim) role in this?

From P.ie:

Put simply, €3.06 billion will be settled by delivery to IBRC of a long term Government bond with an equivalent fair value. Ultimately, it is intended that this long term Government bond will be financed for one year, on commercial terms, with Bank of Ireland who may in turn refinance the bond with the ECB. While this transaction has been approved by Bank of Ireland’s board it remains subject to the approval of the Bank of Ireland shareholders.

As a short term interim measure, pending the results of Bank of Ireland’s shareholders’ vote, the financing of the bond will be a collateralised facility provided by NAMA to IBRC on equivalent commercial terms as the financing with Bank of Ireland. NAMA is in a position to facilitate this collateralised financing from its own funds.

This financing approach reduces the level of Emergency Liquidity Assistance provided by the Central Bank of Ireland to IBRC.

No mention of trackers. This looks very much like a last minute measure. I'm still not clear where the technical problems arose in relation to the above. It was all for that?

noodler

Scofflaw wrote: »

It looks to me that they're funding the bond - in other words, providing the money, although BOI would be getting that money form elsewhere, most likely the ECB, while NAMA has the money in hand.

cordially,
Scofflaw

BoI Statement http://www.bankofireland.com/fs/doc/proposed-securities-repurchase-transaction-with-ibrc.pdf

Under the terms of the Repo, IBRC will have an obligation to repurchase the Bonds from the Bank for approximately €3.06bn in cash not later than 364 days after the effective date. The margin for the Bank over ECB funding which would apply to this transaction is 135bps.

Seems like it would have been easier to do what Honohan suggested might happen i.e. give 3.1bn to IBRC and let them buy a bond straight away for the same money.


EDIT: Later10,

Its that DoF press release I don't quite follow!

Scofflaw

darkman2 wrote: »

lol....no q&a because of a question about "Sheep-worrying by packs of dogs on the Cooley Peninsula" Idiots.

Eh, speaking rules are speaking rules, and the CC's job is to enforce them, not to decide off his own bat what's important. Outrage about it is silly.

darkman2 wrote: »

2 questions - interest rate and length of bond not answered.

Those are apparently "details"...but I suppose that as long as they're not outrageous, they kind of are.

Essentially, what the government has done here is to stave off putting down cash, which - if you've ever done serious debt juggling - is something almost always worth doing.

cordially,
Scofflaw

woodoo

Lou.m wrote: »

OUTRAGED...Ceann Comhairle decides after Noonan speach that the Dáil should talk about sheep instead of questions about what is CLEARLY a matter of public interest!!..Does he have FG ties?? Or is he just incompetent....either way he should go.....remember this you TDS WANTED to question this....but the Ceann Comhairle would not let them..he decided sheep worrying was more important..this decision is potentially and damaging as the BANK BAILOUT...andthe Dáil is forced to talk about SHEEP!.....Ceann Comhairle you are a moronic disgrace!

If you seen it in a comedy sketch show you would think it far fetched.

Lou.m

woodoo wrote: »

If you seen it in a comedy sketch show you would think it far fetched.

Totally choreographed...it is common to allow questions speaking rules allow it.....it is ridiculous

And this is our only negotiable debt then?? Except for a default???

Insolvent is still insolent no matter who has an IOU.

Damned tds cant negotiate

Portugal Spain Italy unraveling.....

But at least the sheep are ok...feed us to the wolves why don't ya....

later12

noodler wrote: »

Seems like it would have been easier to do what Honohan suggested might happen i.e. give 3.1bn to IBRC

Yes but this way the ECB's exposure is not to the IBRC. They've been saying for weeks (months?) they want to reduce ELA exposure to IBRC.

Its that DoF press release I don't quite follow!

Yes, it was; the full version is on the Department's website.

Cookie_Monster

How is dogs worry sheep in Donegal even a national issue, typical localism nonesense, how that question even got approved is beyond me

noodler

later12 wrote: »

Yes but this way the ECB's exposure is not to the IBRC. They've been saying for weeks (months?) they want to reduce ELA exposure to IBRC.

Yeah, just read NWL's analysis and finally get it.

later12 wrote: »

Yes, it was; the full version is on the Department's website.

?? Right...so...if I didn't understand it when I read it on the DoF, how does reproducing it here help? Maybe we got our wires crossed.

Anyway, ECB statement about it:

http://uk.reuters.com/article/2012/03/29/ecb-ireland-idUKB5E7N501320120329

Majorly disappointing part for those of us (and the Government) hoping that something more substanital could be sort for future March 31st payments.

We certainly expect that also in the future the promissory notes will be served according to the schedule to which the government has committed itself.

Godge

Cookie_Monster wrote: »

How is dogs worry sheep in Donegal even a national issue, typical localism nonesense, how that question even got approved is beyond me

Well, if they have moved the Cooley peninsula to Donegal, that is quite a national issue. Logistically, not sure how that could have happened.

Scofflaw

noodler wrote: »

Yeah, just read NWL's analysis and finally get it.

?? Right...so...if I didn't understand it when I read it on the DoF, how does reproducing it here help? Maybe we got our wires crossed.

Anyway, ECB statement about it:

http://uk.reuters.com/article/2012/03/29/ecb-ireland-idUKB5E7N501320120329

Majorly disappointing part for those of us (and the Government) hoping that something more substanital could be sort for future March 31st payments.

That depends on whether that statement actually means that there is no possible restructuring deal. This particular payment deferral isn't supposed to be such a deal, though, and never was - it was supposed to be an attempt to push the payment of this particular promissory note out so there was some chance of it being involved in the hoped-for restructuring. After all, if it's been paid, it can't be restructured.

cordially,
Scofflaw

Sand

Scofflaw wrote: »

The advantage in this is saving the troika cash for current spending and to extend the timeframe before we have to either return to the markets or extend/replace the current troika bailout.

cordially,
Scofflaw

Basically more short term looting by Official Ireland to pay their salaries and pensions at the expense of the younger generation. Interesting advantage.

Scofflaw

Sand wrote: »

Basically more short term looting by Official Ireland to pay their salaries and pensions at the expense of the younger generation. Interesting advantage.

The drawback of "cynicism" is that it's both repetitive and often misses its own mark by a wide margin. Unless you widen the definition of "Official Ireland" out to the point where it covers nearly the whole population - which may, of course, be your intention - the cynical claim you make is either so out of proportion as to be absurd or fundamentally of no more meaning than the dog's bark that gave rise to the term itself.

bored,
Scofflaw

later12

noodler wrote: »

?? Right...so...if I didn't understand it when I read it on the DoF, how does reproducing it here help? Maybe we got our wires crossed.

Oh, yes! My bad, I misread your statement.

Scofflaw wrote: »

That depends on whether that statement actually means that there is no possible restructuring deal. This particular payment deferral isn't supposed to be such a deal, though, and never was - it was supposed to be an attempt to push the payment of this particular promissory note out so there was some chance of it being involved in the hoped-for restructuring. After all, if it's been paid, it can't be restructured.

cordially,
Scofflaw

Maybe I'm being overly pedantic in my reading of the above, but just to be clear, the upcoming PN is being paid, just like last year's was.

There's no question of restructuring the 2012 note anymore, and the state is now left with a different, less malleable piece of material in its place. I know this is not a materially important distinction for the time being, but I think it should be emphasised that the promissory note payment is still being met.

Scofflaw

later12 wrote: »

Maybe I'm being overly pedantic in my reading of the above, but just to be clear, the upcoming PN is being paid, just like last year's was.

There's no question of restructuring the 2012 note anymore, and the state is now left with a different, less malleable piece of material in its place. I know this is not a materially important distinction for the time being, but I think it should be emphasised that the promissory note payment is still being met.

No, I'd agree with you there - the note is being paid. I think my statement is probably also a bit too definite on the question of keeping the debt in play, but I would see a slight potential advantage in not using troika money to pay the note in terms of keeping the debt separated.

I'm a little puzzled by the extent of the barking at this announcement, though. This isn't supposed to be the main deal, it was a separate issue which the government were looking to pull off:

Mr Honohan said that the settlement of the €3.1 billion payment on March 31st with a long-term Government bond instead of cash, expected within days, was a "very considerable step forward" and "a very definite gain" on the ability of the State to repay its debts.

"It puts off for a long number of years the actual need to refinance those payments," he said, but relative to the bigger amount due on the €31 billion promissory notes was "a considerable improvement".

The cost would be at "quite a low valuation" to other sources of funding available and lower than the interest paid on the bailout loans advanced by the troika, he said.

Mr Honohan said that there would be "no net cash outlay" to the State under the terms of the deal being worked for the March 31st payment to settle the €3.06 billion instalment by issuing a Government bond instead of paying in cash.

That's from the IT a couple of days ago: http://www.irishtimes.com/newspaper/breaking/2012/0327/breaking34.html

So this is something they said they were going to do, and have done. Whether they've achieved it at the cost of annoying the ECB - which several commentators believe they have - is another question.

cordially,
Scofflaw

Scofflaw

Scofflaw wrote: »

No, I'd agree with you there - the note is being paid. I think my statement is probably also a bit too definite on the question of keeping the debt in play, but I would see a slight potential advantage in not using troika money to pay the note in terms of keeping the debt separated.

I see, however, that I'm not alone in seeing that possibility:

This gives the Government time to agree a longer-term deal with the troika to restructure the rest of payments due on the promissory notes. That deal could then take in this deferred €3.1 billion bill.

http://www.irishtimes.com/newspaper/finance/2012/0330/1224314097376.html

cordially,
Scofflaw

blowtorch

From the Indo yesterday - 'A DEAL to avoid the repayment of €3.1bn in Anglo debt due at the end of the month has been agreed between the Government and the European Central Bank.

The agreement was confirmed today by Finance Minister Michael Noonan who has headed up negotiations on the debt with the EU/ECB/IMF troika since last September.
'

But today 'In a statement last night the ECB said had "noted" the promissory note payment deferral, and added that it expected Ireland to stick to the promissory note repayment schedule which the Irish authorities had signed up to.'

Got a feeling that Mr. Noonan has done a solo run (an eye on the Ard-Fheis perhaps),
as it's clear that the ECB weren't asked to agree to anything. In fact, the word 'expected' in the last paragraph is actually a threat of types?

As regards a Solo Run - wasn't it just yesterday morning that Enda Kenny wouldn't divulge any information about a 'deal', and basically said it would be discussed at the Ard Fheis? And a few hours later, Michael Noonan goes for goal?

later12

Scofflaw wrote: »

I'm a little puzzled by the extent of the barking at this announcement, though. This isn't supposed to be the main deal, it was a separate issue which the government were looking to pull off:

True, I think it's been well flagged in the past few days that we were only replacing the IOU with an IOU (but we really mean it this time...) and it shouldn't be a surprise. But going by some of the comments made by Prof Honohan at the Oireachtas Committee, there may have been potential for something extra to be announced this week. The poorly orchestrated and last-minute nature of the announcement yesterday (despite the long run-in and now, it seems, straightforward nature of this long term bond) makes me wonder whether there was not, indeed, the case. Maybe something as simple as the funding terms with BKIR. Because even the Government seem a little underwhelmed by this (admittedly, interim) measure.

blowtorch wrote:

Got a feeling that Mr. Noonan has done a solo run (an eye on the Ard-Fheis perhaps),
as it's clear that the ECB weren't asked to agree to anything

I would be surprised if that were the case. I would be very surprised if this were a solo run on behalf of the Government. I don't think it's a co-incidence that the bank which is funding the arrangement is the most viable, least dependent of the covered banks which is in a position to do so. This deal is too sensitive to the wishes of the ECB to not have their name stamped on it. The ECB, like other institutions, often "note the decisions" made by member states to maintain the sense of separation between these politically independent institutions and the sovereign states.

Sand

Scofflaw wrote: »

The drawback of "cynicism" is that it's both repetitive and often misses its own mark by a wide margin. Unless you widen the definition of "Official Ireland" out to the point where it covers nearly the whole population - which may, of course, be your intention - the cynical claim you make is either so out of proportion as to be absurd or fundamentally of no more meaning than the dog's bark that gave rise to the term itself.

bored,
Scofflaw

The same is true of "optimism" - the recent hysteria over the supposed China "bond buying deal" demonstrates that. Though, its more entertaining to observe I'll grant you.

The whole concept of government spending as redistribution of wealth implies money being taken from some sectors of society, and given to others. The reality is Ireland's insiders are paying themselves wages and pension deals which are far in excess of international norms and - much more critically - Ireland's ability to fund them.

The spending to fund this is a very large portion of current spending (pensions being unfunded, and the NPRF being pillaged in more short term, can kicking exercises of this ilk), for just under 300,000 people currently in public sector employment and slightly less in retirement. This is done on the back of the rest of society who picks up the tab in terms of increased taxes and increased debt which they will have to work to pay off. The hope-based policies of 2009-2010-2011 where we would just "grow" our way back to a point where we could afford this unsustainable state of affairs has not come to pass (as cynics of the era might have noted...).

That you see freeing up Troika cash to fund unsustainable current spending of that nature for a few months longer as an advantage is as I said a very odd. Its not a clear advantage for "Ireland" - its a clear advantage for some who will benefit it from it, the majority of Irish people will only have to pay more in the long run.

recedite

later12 wrote: »

we were only replacing the IOU with an IOU

The new IOU has interest to be paid as well.......does anyone know what the bond yield is yet?
If it is less than the rate of inflation we can say it is a "good thing". Otherwise we are just continuing to impoverish the future.

noodler

recedite wrote: »

The new IOU has interest to be paid as well.......does anyone know what the bond yield is yet?
If it is less than the rate of inflation we can say it is a "good thing". Otherwise we are just continuing to impoverish the future.

http://ntma.ie/Publications/2012/SaleOf2025BondToIBRC.pdf

The coupon seemd to be 5.4%.

Irish bonds trading at 88cents in the euro so bond had to be issued for 3.46bn to allow it be measured to market at 3.06bn.

recedite

Nice little earner for anyone with cash; possibly the same bondholders who benefited from the State's largesse to Anglo in the first place will end up purchasing them?

noodler

recedite wrote: »

Nice little earner for anyone with cash; possibly the same bondholders who benefited from the State's largesse to Anglo in the first place will end up purchasing them?

No?

Nama, then BoI buy the bond.

recedite

noodler wrote: »

http://ntma.ie/Publications/2012/SaleOf2025BondToIBRC.pdf

"it will be tradable and available for repo transactions in the normal way"

later12

recedite wrote: »

"it will be tradable and available for repo transactions in the normal way"

Yes - but BKIR themselves will be repo-ing the Irish bond with the ECB.

That is unless the bank's shareholders decide to be rogues about it and refuse to finance the bond. Which would at least bring something amusing to this whole affair.

Re: 5.4% coupon, it was never going to be anything less. The only figure of particular relevance is the 2.35% payment to Bank of Ireland, 1% of which is going on ELA, so it's a net 1.35%.

noodler

recedite wrote: »

"it will be tradable and available for repo transactions in the normal way"

Aye, as later said (and as teh BoI and DoF statements say) the Bond will be sold back to IBRC in one year's time......and BoI will use it as collateral to borrow from the ECB in the meantime.