As the Deputy will be aware the Irish Government Bonds that have been issued in exchange for the Promissory Notes are floating rate bonds. The coupon on these bonds is 6-month Euribor plus a margin ranging from 2.50% to 2.68%. Information was released by the Department of Finance last week analysing the impact of the transaction on the general government deficit and debt over the period 2013 – 2015. The table sets out general government debt (GGD) forecasts for the three years 2013 – 2015 based upon no policy change.
Three years is the standard forecast horizon used throughout the EU in budgetary publications and covers the medium term budgetary framework. Accordingly, when the Department publishes the Stability Programme Update in April next it will contain an official forecast for the period out to 2016.
General Government Debt Impact
|
2013
|
2014
|
2015
|
(€M)
|
-
|
-
|
-
|
GGD per Budget 2013 document
|
203,500
|
209,200
|
211,900
|
Change in GGD in year
|
1,350
|
-1,050
|
-1,100
|
Cumulative change in GGD
|
1,350
|
300
|
-800
|
GGD post-transaction
|
204,850
|
209,500
|
211,100
|
Pre-Transaction Underlying GGB/Nominal GDP
|
121.30%
|
120.20%
|
116.80%
|
Post-Transaction Underlying GGB/Nominal GDP
|
122.10%
|
120.30%
|
116.40%
|
Change
|
0.80%
|
0.20%
|
-0.40%
|
Note that the above table showing the GGB and GGD impacts assume that the full portfolio of Government bonds are priced at an interest margin of 270 basis points over 6-month EURIBOR. The Government bond portfolios were ultimately priced at a range of different interest margins over 6-month EURIBOR.
Copies of this material are available on the Department of Finance website under the following links:
http://www.finance.gov.ie/viewdoc.asp?DocID=7543
http://www.finance.gov.ie/viewdoc.asp?DocID=7545