As the Deputy is aware it has been estimated that there will be a c.€20 billion reduction in the National Treasury Management Agency’s market borrowing requirements over the next 10 years (before transaction costs) as a result of replacing the amortising Promissory Notes with a portfolio of non-amortising Irish Government bonds. The €20 billion reduction in market borrowing requirement over the next decade to which the Deputy refers was calculated by comparing the estimated borrowing requirements from the market to finance the payments on the Promissory Notes under the previous arrangement to the requirements under the existing arrangement in which a portfolio of Irish Government bonds has replaced the Promissory Notes.
The reduced borrowing requirement over the next 10 years arises due to a number of factors, the most significant of which is the fact that capital repayments are not required to be made over the period. The borrowing requirement from the market is also reduced by the lower interest rate arrangement on the new bonds.
Key assumptions applied to the calculation include a forecasted 6 month Euribor curve, forecasted ECB and sovereign refinancing rates and forecast of payments from the Central Bank of Ireland to the State. Economic growth, net present value and inflation were not used in the calculation. As the Deputy will appreciate these are assumptions with regard to future events which are impossible to predict with certainty.