RTÉ - Milestone reached as all IBRC floating rate bonds cancelled

ClubMan said:
www.rte.ie

Milestone reached as IBRC floating rate bonds cancelled

A milestone was reached by the National Treasury Management Agency today after it said it completed the cancellation of all Floating Rate Bonds that were issued in connection with the liquidation of the Irish Bank Resolution Corporation, formerly Anglo Irish Bank.
www.rte.ie www.rte.ie
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A bit of good news - at a rate of 5.72% that was one set of bonds I'm happy to see the back of. Of course, it was a bit circular as the holder was the Irish Central Bank so some of the cash went back to the Exchequer but even so, it ends a sorry chapter in our public financial history.
 
So the NTMA first purchased back the Bonds and then cancelled them. Where's the gain to the exchequer there?
 
Opus2018 said:
The gain is as the bond has been cancelled your debt has fallen by that amount and you don’t pay interest on it any more.
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Thanks.

Does that also mean that the Exchequer has lost the value of the interest on the Bond that it was receiving from the NTMA?

And is it also correct to say that although the Exchequer has gained by the amount received from NTMA to repay the bonds, the NTMA's balance sheet has fallen by the same amount?

Smoke and mirrors!
 
Marsupial said:
Does that also mean that the Exchequer has lost the value of the interest on the Bond that it was receiving from the NTMA?
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The NTMA is (an agency of) the Exchequer. The NTMA was paying interest to the Central Bank, who remitted it to the Exchequer (less some profit).

Marsupial said:
And is it also correct to say that although the Exchequer has gained by the amount received from NTMA to repay the bonds, the NTMA's balance sheet has fallen by the same amount?
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Essentially, money was raised on the market to buy back these notes, its more of a refinancing, but the overall level of Government Debt has fallen.

Marsupial said:
Smoke and mirrors!
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Don't pull the curtain back too far!
 
Itchy said:
Don't pull the curtain back too far!
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I'm relying on better informed posters to pull back that opaque curtain for me!

Here's an extract from the Indo's report (by Sarah Collins) that even Muggins can understand - fascinating to read that they were 40 year Bonds!

The National Treasury Management Agency (NTMA) today bought back and cancelled an Irish floating rate treasury bond, or note, worth €534m, which was due to mature in 30 years’ time. It was the last of the bonds issued by the NTMA in 2013 as part of the €29bn liquidation of Anglo. The bonds were issued in exchange for infamous promissory notes under the complex deal to shut down the bust lender without allowing its losses to fall on the Central Bank, by then its major creditor.
Buying back the debt early cuts the NTMA’s potential future interest bill.
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Itchy said:
Both have fallen.

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Well remember we’re in surplus at the moment so it’s not refinancing really. Basically our cash deposit assets are down along with a corresponding reduction in liabilities. Given we were getting not much in interest in deposits and paying out nearly 6% in a bond liability, it makes sense to eliminate it.

An overall reduction in debt is something the bond markets would like and the country is rewarded by paying a lower rate on its bond liabilities.

By the way, you might want to check out the CSO’s publication on Government Finance Statistics.

Here you go:- quarterly figures…

Government Finance Statistics (Q) - CSO - Central Statistics Office

www.cso.ie www.cso.ie
 
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