Dáil Éireann Debate, Thursday - 28 February 2013
41. Deputy Pearse Doherty asked the Minister for Finance if he has carried out any assessment on the economic impact of the sale of the bonds which replaced the promissory notes by the Central Bank at an earlier date than predicted by his Department; and if he will make a statement on the matter. [10560/13]
View answerThe Government bonds are now held by the Central Bank of Ireland following the liquidation of IBRC. Eight new Floating Rate Treasury Bonds have been issued to discharge the Promissory Notes liability consisting of: a 25 year bond of €2bn maturing in 2038 with an interest rate of 6-month Euribor plus a margin of 2.50%; a 28 year bond of €2bn maturing in 2041 with an interest rate of 6-month Euribor plus a margin of 2.53%; a 30 year bond of €2bn maturing in 2043 with an interest rate of 6-month Euribor plus a margin of 2.57%; a 32 year bond of €3bn maturing in 2045 with an interest rate of 6-month Euribor plus a margin of 2.60%; a 34 year bond of €3bn maturing in 2047 with an interest rate of 6-month Euribor plus a margin of 2.62%; a 36 year bond of €3bn maturing in 2049 with an interest rate of 6-month Euribor plus a margin of 2.65%; a 38 year bond of €5bn maturing in 2051 with an interest rate of 6-month Euribor plus a margin of 2.67%; and a 40 year bond of €5bn maturing in 2053 with an interest rate of 6-month Euribor plus a margin of 2.68%. The bonds will pay interest every six months (June and December).
The Central Bank of Ireland will sell the bonds but only where such a sale is not disruptive to financial stability. The Central Bank has undertaken that a minimum of bonds will be sold in accordance with the following schedule: €0.5bn by the end of 2014, €0.5bn per annum from 2015 to 2018, €1bn per annum from 2019 to 2023 and €2bn per annum from 2024 onwards.
Any hypothetical acceleration in the bond sale schedule could potentially impact to some extent on sovereign borrowing costs and the pass-through to the real economy, if any, could occur through the impact on the interest rate conditions faced by households and firms. The impact on the economy would also depend on the interest rate environment and liquidity conditions (globally and nationally) which prevail at the time of the sale of the bonds, which are impossible to predict over the very long term.
