Bernard Durkan (Kildare North, Fine Gael)
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287. To ask the Minister for Finance whether the possibility of the utilisation of a Government development bond might be considered to address the ongoing housing shortage, in either the public or the private sector; and if he will make a statement on the matter. [33365/15]

Michael Noonan (Limerick City, Fine Gael)
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The proceeds of all borrowings by the Exchequer, as well as tax revenues, non-tax revenues and other receipts are lodged to the Exchequer account at the Central Bank of Ireland to fund on-going Government expenditure.

The National Treasury Management Agency (NTMA) has advised that project-specific bonds issued by the State linked to a specific project and which are serviced and repaid from the Exchequer in the same way as standard Government bonds, may be of limited interest to investors due to the relative lack of liquidity. Investors in project-specific bonds would require higher yields than standard Government bonds to reflect lower liquidity. Such project-specific bonds, if issued by Government, would also be on the Government's balance sheet.

However in the case of a Public Private Partnership (PPP), where the State selects a private consortium to Design, Build, Finance & Operate State infrastructure, that private consortium can issue project-specific bonds. Such bond issuance may be deemed to be outside of General Government provided that the necessary risks are contractually transferred to the private sector in accordance with Eurostat rules. The latter type bonds are considered by investors to carry significantly more risk than standard Government issued bonds and consequently require higher yields to reflect the risk profile.

I would like to draw the Deputy's attention to the recently announced joint venture between the Irish Strategic Infrastructure Fund (ISIF) and KKR Credit. The joint venture, named Activate Capital will invest in the development and construction of housing, with €500 million of financing, which will assist in normalising the sector and addressing the housing shortfall. The venture will be a €500 million vehicle and will be financed through a €325 million investment from the ISIF (its biggest single investment to date) and €175 million investment from KKR. This is good news for jobs, growth, potential house purchasers, and the construction sector. This joint venture will be an important source of funding for increasing the supply of medium to large housing developments.