Written answers

Tuesday, 23 September 2014

Photo of Michael McGrathMichael McGrath (Cork South Central, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

166. To ask the Minister for Finance the value of Government bonds held by the Central Bank of Ireland in respect of the arrangement entered into to replace the promissory notes; if he will provide details of the disposal to date of any of these bonds; if he will specify the minimum disposal schedule agreed with the ECB; if he will indicate if there have been any changes to this agreed minimum disposal schedule; if he will specify the annual coupon and or amount of interest being paid by the Government to the Central Bank in respect of the bonds. [35635/14]

Photo of Michael NoonanMichael Noonan (Limerick City, Fine Gael)
Link to this: Individually | In context | Oireachtas source

Subsequent to the liquidation of IBRC the Central Bank acquired €25bn of Floating Rate Notes (FRNs) and €3.46bn of Government Fixed Coupon 2025 Government bonds.  The Bank undertook to sell the combined portfolio of the FRNs and the fixed rate bond as soon as possible provided the conditions of financial stability permit.

The Bank also indicated that, as a minimum, it will make sales in accordance with the following schedule: to end 2014 (€0.5 billion), 2015-2018 (€0.5 billion per annum), 2019-2023 (€1 billion per annum), and 2024 on (€2 billion per annum until all bonds are sold).  The Bank's recent Annual Report notes that sales have been made from this combined portfolio, with the Bank selling €350mn of its holdings of the Government 2025 Fixed Rate Bond in 2013.  

The timing of the sales and the management of its investment holdings are a matter for the Central Bank and it is independent in the exercise of its functions, neither I nor the Department of Finance have any role in the matter. 

I have been advised by the NTMA that total cash interest payable on the floating rate bonds in 2013 was €638 million. Following last month's rate reset in respect of the December 2014 interest payment, total cash interest payable in 2014 is presently expected to be just over €750 million. The increase in interest payable in 2014 compared to 2013 largely reflects the fact that a full year's interest is payable this year. Interest payable on the floating rate bonds is currently projected to increase in the coming years, consistent with the projected increase in the six-month Euribor interest rate as the interest margins on the floating rate bonds are fixed. The interest margin averages 2.63% across the eight issues.  

Comments

No comments

Log in or join to post a public comment.