Thursday, 22 February 2018

Ceisteanna (70)

Michael McGrath


70. Deputy Michael McGrath asked the Minister for Finance further to Parliamentary Question No. 151 of 13 February 2018, the interest rate charged on the €602 million in Exchequer borrowings; the maturity date of these borrowings; the cost of reversing out these borrowings and refinancing them with standard Government debt; and if he will make a statement on the matter. [9223/18]

Amharc ar fhreagra

Freagraí scríofa (Ceist ar Finance)

The NTMA have informed me that Schuldschein were issued by Ireland in March 2009, as well as in June and September 2010 with original maturities ranging from fifteen to twenty years. They were issued as a means of diversifying the Exchequer’s sources of funding. They were issued at fixed interest rates, similar to standard fixed-rate Irish government bonds. The weighted average interest rate of 5.8% was in line with Irish government bond yields at that time.

For example, in March 2009 an Irish government bond maturing in 2020 was issued via auction at a yield of just over 5.8%. Similarly in September 2010, a bond maturing in 2018 was issued via auction at a yield of just over 6%. This was the last bond auction before Ireland entered the EU-IMF Programme of Financial Support in late 2010.

The first Schuldschein is due to mature in March 2024, and the last in September 2030. Schuldschein are, by their nature, generally held to maturity by the initial investor. In cases where they are sold, it will be at the full market price reflecting their fixed interest rate to maturity. This effectively creates a “break-cost” which would need to be considered if an opportunity for re-financing arose, as the associated costs could offset any potential interest savings. In this sense, they are very similar to standard fixed-rate Irish government bonds.