A bit of good news - at a rate of 5.72% that was one set of bonds I'm happy to see the back of. Of course, it was a bit circular as the holder was the Irish Central Bank so some of the cash went back to the Exchequer but even so, it ends a sorry chapter in our public financial history.Milestone reached as IBRC floating rate bonds cancelled
A milestone was reached by the National Treasury Management Agency today after it said it completed the cancellation of all Floating Rate Bonds that were issued in connection with the liquidation of the Irish Bank Resolution Corporation, formerly Anglo Irish Bank.www.rte.ie
The gain is as the bond has been cancelled your debt has fallen by that amount and you don’t pay interest on it any more.So the NTMA first purchased back the Bonds and then cancelled them. Where's the gain to the exchequer there?
The gain is as the bond has been cancelled your debt has fallen by that amount and you don’t pay interest on it any more.
Does that also mean that the Exchequer has lost the value of the interest on the Bond that it was receiving from the NTMA?
And is it also correct to say that although the Exchequer has gained by the amount received from NTMA to repay the bonds, the NTMA's balance sheet has fallen by the same amount?
Don't pull the curtain back too far!Smoke and mirrors!
If it's refinancing then surely the level of debt has not fallen but the ongoing costs have?Essentially, money was raised on the market to buy back these notes, its more of a refinancing, but the overall level of Government Debt has fallen.
Don't pull the curtain back too far!
The National Treasury Management Agency (NTMA) today bought back and cancelled an Irish floating rate treasury bond, or note, worth €534m, which was due to mature in 30 years’ time. It was the last of the bonds issued by the NTMA in 2013 as part of the €29bn liquidation of Anglo. The bonds were issued in exchange for infamous promissory notes under the complex deal to shut down the bust lender without allowing its losses to fall on the Central Bank, by then its major creditor.
Buying back the debt early cuts the NTMA’s potential future interest bill.
If it's refinancing then surely the level of debt has not fallen but the ongoing costs have?
Well remember we’re in surplus at the moment so it’s not refinancing really. Basically our cash deposit assets are down along with a corresponding reduction in liabilities. Given we were getting not much in interest in deposits and paying out nearly 6% in a bond liability, it makes sense to eliminate it.
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