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WE LIVEBLOGGED ALL the proceedings today as the Central Bank Governor Patrick Honohan addressed the Oireachtas on Committee on Finance, Public Expenditure and Reform on the repayment of the Anglo Irish Bank promissory note.
Honohan was requested to meet the all-party Oireachtas Committee as a matter of “urgent priority” earlier this month, following a vote which the government unexpectedly lost.
The Government is hoping that repayment of the promissory can be delayed until 2025 if it is swapped for long-term government bond. Amongst other things, Honohan was quizzed in public session on possible changes to Budgetary profile in response to such n arrangement and the Constitutional challenge against the payment of the promissory note.
27 Mar 2012
2:44PM
The Central Bank Governor has been welcomed to the Committee by Alex White TD.
27 Mar 2012
2:47PM
Honohan: ahead of the March 2012 payment the Central Bank has been working on mechanism on the question of the promissory note in order to reach a compromise that is agreeable to Ireland.
27 Mar 2012
2:48PM
Michael McGrath: are we being ambitious enough in what we are seeking to achieve – particularly as the ECB has said it can be more flexible?
27 Mar 2012
2:50PM
McGrath asks what interest rate would apply the proposed government bond, and whether the Governor yet has a sense where these discussions with the ECB taking Ireland.
Honohan: a long term bond is a” major step forward”, as if puts of the need to refinance payments and lowers net cost.
27 Mar 2012
2:58PM
Honohan says that the whole issue needs to be structured in a way that “brings us to a safer place”. Says that discussions were“very much” going in a positive direction.
27 Mar 2012
2:58PM
Honohan on interest rate: We need to look at the underlying economic flows – whether considering a bond or promissory note.
27 Mar 2012
3:01PM
Honohan asked if he has looked into deferring the interest on the setting on the Irish government bond.
27 Mar 2012
3:04PM
Honohan: The promissory note probably an “overly complicated device” for ensuring the solvency of Anglo.
27 Mar 2012
3:06PM
The promissory note is a “a manifestation of the guarantee” – the Government was faced with the decision to pay all of Anglo’s debts immediately or “put in a note”, says Honohan.
27 Mar 2012
3:07PM
Honohan predicts that there will be several more months of discussions because of the objectives of ‘different players involved’.
27 Mar 2012
3:08PM
Honohan: Any changes reached will not impact this year’s Budgetary profile.
27 Mar 2012
3:09PM
Pearse Doherty TD asks whether there will be any changes to Budgetary profile either this year or next year.
27 Mar 2012
3:10PM
Doherty also asks whether the capital amount can be reduced.
27 Mar 2012
3:12PM
Doherty asks the Governor how this proposal could increase the country’s debt sustainability, as it has been suggested.
27 Mar 2012
3:15PM
Honohan: In terms of the proposal on this payment – it is important to remember that the value of debt of debt to GDP ratio is only one indicator of sustainability. So, by lengthening the debt,debt sustainability will be improved.
27 Mar 2012
3:17PM
Interestingly, Bloomberg reports that the bond that Ireland would be use in order to repay the first €3.06bn would currently costs us almost 7 per cent in annual interest.
27 Mar 2012
3:19PM
Doherty: What is there to prevent IBRC trading the sovereign bond on the markets?
Honohan: That would be a matter for the Minister for Finance… but I can’t envisage it as a problem.
27 Mar 2012
3:22PM
Kevin Humphreys TD: Can you confirm or deny that the interest on the long term bond is 6.8 per cent?
Honohan: The coupon is 5.4 per cent, but the market yield will depend on the day of the relevant transaction.
27 Mar 2012
3:22PM
Humphreys: Has the Central Bank taken advice on the Constitutional challenge?
27 Mar 2012
3:24PM
Honohan says Humphreys’ questions are all ones he is restricted to answer in public session. Says he will address them privately.
27 Mar 2012
3:26PM
Stephen Donnelly TD asks Honohan what is the projected cash shortfall for this year – ie how much additional money IBRC will need – and about the sustainability of the debt.
27 Mar 2012
3:28PM
Honohan says that the objective of the plan is to eliminate “the cash need” of IBRC by postponing it.
27 Mar 2012
3:31PM
Honohan in response to Donnelly: “The debt position, of course, is calculated… I share your concern that we might get into a situation where we become too optimistic and complacent.”
He adds that making arrangements which prolong the maturity of the promissory note will put us in “a safe position.”
27 Mar 2012
3:37PM
Meeting has gone into private session
That’s all folks – thanks for joining us!
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