Written answers

Wednesday, 8 October 2014

Photo of Joan CollinsJoan Collins (Dublin South Central, United Left)
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51. To ask the Minister for Finance the number of bonds, from the €25 billion in bonds created in February 2013 for the special liquidation of Irish Bank Resolution Corporation, and of the €3 billion in bonds created in 2012 to fund the payment of the IBRC promissory note redemption, that have been sold by the Central Bank of Ireland in 2012, 2013 and to date in 2014; the predicted additional quantum to be sold by the end of 2014. [38315/14]

Photo of Joan CollinsJoan Collins (Dublin South Central, United Left)
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52. To ask the Minister for Finance the position of the European Central Bank on the €25 billion in bonds created in February 2013 for the special liquidation of Irish Bank Resolution Corporation, and of the €3 billion in bonds created in 2012 to fund the payment of the IBRC promissory note redemption; if he or his Department has had recent discussions with the ECB regarding these bonds and if the ECB has expressed the view that its concerns about these bonds would be somewhat mitigated if the bonds were sold into the sovereign bond market; and if he will make a statement on the matter. [38316/14]

Photo of Joan CollinsJoan Collins (Dublin South Central, United Left)
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53. To ask the Minister for Finance if there is no net benefit to the Exchequer if the Central Bank of Ireland disposes into the sovereign bond market the €25 billion of bonds created in February 2013 for the special liquidation of Irish Bank Resolution Corporation, and the €3 billion in bonds created in 2012; if he will fund the payment of the IBRC promissory note redemption, in view of the net surplus at the CBI remitted to the State, and that the interest paid by the CBI to the European Central Bank on these bonds is nugatory. [38323/14]

Photo of Joan CollinsJoan Collins (Dublin South Central, United Left)
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54. To ask the Minister for Finance further to the ongoing legal challenge to the lawfulness of the promissory notes used to capitalise the former Anglo Irish Bank, the Irish Nationwide Building Society and the Educational Building Society the risks of the Central Bank of Ireland disposing, in advance of the conclusion of this court case, of the €25 billion in bonds created in February 2013 for the special liquidation of Irish Bank Resolution Corporation, and the €3 billion in bonds created in 2012 to fund the payment of the IBRC promissory note redemption, his views that it is prudent to copperfasten the legitimacy of these bonds by disposing of them in the sovereign bond market when the sole lender is the European Central Bank; and if he will make a statement on the matter. [38324/14]

Photo of Joan CollinsJoan Collins (Dublin South Central, United Left)
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55. To ask the Minister for Finance the contact he and his Department has had with the Central Bank of Ireland regarding the disposal and in particular, the accelerated disposal, of the €25 billion in bonds created in February 2013 for the special liquidation of Irish Bank Resolution Corporation, and the €3 billion in bonds created in 2012 to fund the payment of the IBRC promissory note redemption; and if he will make a statement on the matter. [38325/14]

Photo of Michael NoonanMichael Noonan (Limerick City, Fine Gael)
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I propose to take Questions Nos. 51 to 55, inclusive, together.

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 current schedule would see all of the bonds held by the CBI sold by c.2034. 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 Central Bank does not provide updates on bond sales outside of their annual report.

Under the original Promissory Note arrangement, the Government was scheduled to make annual payments of €3.1 billion thereby putting significant upward pressure on the amounts to be funded from the market. Following a long period of negotiation the notes were replaced in February 2013 with a portfolio of Irish Government bonds (as outlined above). The provision of these long-term non-amortising Government bonds to replace the amortising Promissory Notes has therefore had significant benefits from a market perspective as it ensures that there will be much less issuance of Irish Government bonds into the market over the next decade and beyond than would otherwise have been the case.

The market continues to react positively to the restructuring and we have recently seen further reduction of the 10 year bond yields to 1.65%, far lower than had been the case before the State entered the EU/IMF programme and thus enabling the State to substantially reduce its cost of borrowings.

The Central Bank is independent in respect of its decisions to sell the bonds held by them as a consequence of the promissory note exchange, however, as outlined above, the current schedule would see all of the bonds held by the CBI sold by c.2034.

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

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