Dáil Éireann Debate, Tuesday - 22 January 2013
208. Deputy Kevin Humphreys asked the Minister for Finance if there has been any consideration of issuing sovereign debt bonds under non-domestic law such as in New York or the UK; and if future Irish Government Bonds issued this year will include collective action clauses; and if he will make a statement on the matter. [2292/13]
View answerI am informed by the National Treasury Management Agency (NTMA) that euro area countries issue their bonds under domestic law and this is the market standard for direct issuance. Certain NTMA borrowing programmes however are issued under non-Irish law. For example, the Global Medium-Term Note (GMTN) programme and the Euro Commercial Paper (ECP) programme are governed by English law, which is normal for this type of programme, while Ireland’s US Commercial Paper programme is governed by New York law. Ireland has also issued debt under German law. The Agency generally has no objection in principle to considering other foreign law to govern its debt and is guided rather by commercial and pragmatic considerations with a view to minimising the burden of the National Debt on the tax payer. With regard to the inclusion of Collective Action Clauses (CAC) in Irish Government Bonds issued this year, I am informed by the Agency that, following the conclusion of the European Council of 24-25 March 2011, a standardised and identical CAC including supplemental provisions was developed and agreed by the Economic and Financial Committee on 18 November 2011. In accordance with paragraph 3 of Article 12 of the ESM Treaty, the model CAC became mandatory for all new euro area government securities with a maturity above one year issued on or after 1 January 2013 and in a way which ensures the legal impact is identical in all Member States. This will be incorporated in any new issue of Irish Government Bonds. However, to ensure the smooth operation of the financial markets, it is possible to continue to issue or tap existing bonds which do not have CAC clauses. However, the degree to which a country can continue to issue existing bonds is limited. In 2013 the limit is 45% of the total face amount of all central government debt securities issued by that Member State.
