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The National Treasury Management Agency has reduced the amount it must pay on a bond falling due in 2016 by just over €2 billion.
The State will now have to pay back €8.13 billion on its 4.6% treasury bond 2016 rather than the full €10.2 billion that had been due.
The deal involved the debt agency buying back some of the bond it had issued to investors itself and replacing it with repayments that fall due on later dates.
The deal was struck to alleviate the repayment burden falling due in 2016.
Cantor Fitzgerald bond dealer Ryan McGrath said that the Government had done a “satisfactory” job on this morning’s deal.
He said that the return was somewhere in the middle of the anticipated range, with the NTMA facing the possibility of cutting down its 2016 obligation by between €1 billion and €3 billion.
The repayment schedule for the next few years looks positive, he said, although as we edge towards the end of the decade our payback totals begin to grow, meaning the NTMA will have more refinancing work on its hands in the coming years.
In advance of the agency’s trip to the bond markets next week, he said that we should continue to benefit from the low interest rate environment created by recent ECB actions.
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Would people prefer the opposite or is complaining a default position?
They’re unhappy about the possibility that a return to better times could result in their favourite political party losing out. Mixture of Sinn Fein supporters, socialists and vague I-saw-V-for-Vendetta-and-it-was-a-pretty-cool-movie revolutionaries.
No, we won’t complain……but just point out this payment was due close to an election.
Or that the NTMA are working on reducing debt through better use of bonds…. Which is their job.
Crack open the champagne. Bonuses and pension top ups all round.
You’re a walking stereotype. Could have thrown in a rant about the bankers and the EU while you were at it.
Where I come from a train runs on tracks ! A walking train .. is that why your face is so full of pain , walking a train can’t be easy !
smile dude smile – let the sunshine bounce !
Just in time for election bullshit promises in 2016 what a bunch of corrupt cohorts we have running our country. BOC
We want these pushed out, let inflation deal with them, while we have a chance to do business at record low rates.
If Joe Higgins, Pearse Doherty etc were in charge then this is the exact same thing they would do.
Do business with whom Sean ; the foreigners have us cleaned out …. and we don’t tax home-based or foreign companies enough to the detriment of the workers pay …. there is no money left for seed capital and even if there was who is going to chance starting up again ….
Ireland is in famine survival mode …. spend nothing , do nothing and wait for it all to pass … and who would blame anyone after what happened …
I think B. Cowen and co. were sold a turkey B.T.W. but they should have fired it back ; with interest !
Short term gain, long term pain
Doesn’t extra interest over a longer term mean this is costing us money?
Basically using credit card to pay mortgage;
unless we got low enough rate on new loans comparative to preexisting loans to make this a gain but hard to imagine that big a difference
Yes, the new loan is cheaper than the one it replaces.
The 2016 repayment schedule was €10.1bn @ 4.6%
So its been reduced to just over €8 bn at the 4.6% now
The adjustment will save about €87 million over 2015/16.
1bn of the reduction was a buy-back at a lower rate.
The other billion was a 2 for one swap to be redeemed in 2023.
€8bn is still a large obligation for 2016 though, hopefully the NTMA aren’t finished.
Not at all.
The loan rates on new loans are record lows, what we want to see is the NTMA doing this repeatedly.
THIS IS GOOD NEWS no matter who is in Govt. or what they desire.
Is everyone insane? So the country’s problems can be solved by forever asking for extensions to loans? Um… what happens when we run out of creditors who will accept our requests to extend the loans?
I’ll tell you what – the country either goes bankrupt or else enormous austerity is forced on the country to repay the loans immediately. And this would be real horrendous Great Depression level austerity.
The whole argument that we can extend into the future and save money because of inflation is ridiculous. Inflation is pretty much zero percent, and we are paying almost 5%.
I despair. The country has no hope if the people who will pay off the debt (the younger generation of TheJournal readers) are all happy to go along with this madness of extend and pretend.
Seanie,
€8bn in 2016. Where do you think that’s coming from?
It would have grown to €8.6b by 2016 when interest payments are taken into account. But that doesn’t matter to the idiot young generation who think this is all a laugh, and that the problem will go away somehow.
Meanwhile this generation will wake up when it’s too late: when they find that there is zero money left over to pay them a state pension.
Ask yourself a question: if you knew you couldn’t rely on the government for a pension then wouldn’t you do everything you could to try to stop the older generations from spending your pension assets just so that they can keep their standard of living for another few years?
How bad do your own retirement prospects have to be before you wake up?
What is your solution John?
@Paul.
The debt is rolled over.
John.
This is good but I’m still in no doubt that the only thing that will save the Euro and the wider European economy is debt write offs.
Debt write offs for states, people, companies will have to happen if Europe is not to be left behind completely.
@ Sean
That’s fine – but what happens if the creditors don’t agree to a debt write-off? The answer can be seen in the disaster that is Argentina.
The solution is to stop the madness asap and agree a write-off, or else threaten to declare bankruptcy. At least this way we might have some assets left over. But the current crop of politicians are under orders from the electorate to keep borrowing more and more, until eventually every single asset and utility in the country is handed over.
The debt write off will happen in an agreed way or in a collapse.
Though I agree with your analysis above.
Countries will however always have to borrow, they is good business and it makes sense, obviously we need to be restrained and return to reasonable levels.
The problem with waiting is that we are effectively including the future productivity of the country in any debt write-off deal. If we do it now then we hand over the assets owned by the state. If we wait then we will also need to hand over all future wealth and productivity gains.
So your saying…. Refuse to repay any foreign debt…. As if that is consequence free?
Sure why tax at all when you can just borrow & refuse to pay it back.
No, I’m not saying to refuse to repay. If the creditors don’t agree a write-down then I’m saying to declare bankruptcy and hand over the assets owed. We’ve already lost ownership if those assets anyway, it’s just that we are pretending that we still own them.
By continuing to borrow more we are pledging any new assets the country creates and earns.
John.
This is good but I’m still in no doubt that the only thing that will save the Euro and the wider European economy is debt write offs.
Debt write offs for states, people, companies will have to happen if Europe is not to be left behind completely.
I agree seanie ; sorry I was in a terrible mood earlier ….
do you think if we slipped in a couple of zeroes onto the “2″ above anyone would notice …. sneaky little legal move ….write the lot off in one go !
At what rate did they buy them back at? Replacing them with bonds that fall due at a later date still means you have to pay them. And you may save due to inflation but I’d guess there guaranteed against that happening.so they’ll just be lumped in with the next load of bonds, and then what? Do the same thing again.
Thanks for the article Jack but is there any chance you could expand it a bit in language I can understand and I am being serious here.
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