Dáil Éireann Debate, Wednesday - 5 July 2017
80. Deputy Thomas P. Broughan asked the Minister for Finance if the €3 billion received from the sale of shares in a bank (details supplied) has been used to pay down a portion of the national debt; the mechanism by which this was achieved; when he expects to receive an additional €400 million; the updated size of the national debt following these allocations; and if he will make a statement on the matter. [31677/17]
View answerThe State last week sold 25% of AIB's ordinary share capital at a price of €4.40 per share for consideration of almost €3 billion. The State also granted an additional over-allotment option over a further 3.75% of AIB's ordinary share capital as part of this transaction. Hence, unless some of these shares are bought back in the market by our stabilisation agent in the period post floatation, the State will recoup around €3.4 billion from the Initial Public Offering (IPO). This additional €400 million will be received by the State in the coming weeks as the stabilisation period ends.
The debt forecasts in the April 2017 Stability Programme Update (SPU) did not factor in any proceeds from potential banking related asset disposals.
The €3 billion AIB proceeds reduce the amount that the National Treasury Management Agency (NTMA) must borrow in the market and therefore, all other things being equal, will reduce the overall level of debt compared to that forecast in the SPU. The proceeds have the immediate impact of improving the net debt position (i.e. gross debt less cash and other certain assets).
Given the current market back-drop and historically low interest rates, the NTMA plans to maintain its presence in the market over the coming months and to that end, has scheduled bond auctions for later this month and September.
The NTMA will review its future funding plans, including for Quarter 4 2017, in the coming weeks or months. It will consider a range of factors in its deliberations, including these proceeds, financial market conditions generally and the Government’s fiscal projections.
