As the Ballyhea protestors make their long journey back to the Shire from Frankfurt today, ahead of an appearance by one of the protest leaders, Diarmuid O’Flynn on tonight’s Vincent Browne show at 11pm on TV3, in the Dail this morning, the Minister for Finance was providing a sense of the remaining scale of the bondholder bailout. Sinn Fein’s finance spokesperson Pearse Doherty asked the Minister about his intentions towards the two senior unsecured unguaranteed bonds that are scheduled to be paid by what was Michael Fingleton’s Irish Nationwide Building Society (INBS) on 26th June 2012. The two bonds – XS0306307694 and XS0306306613 – have €634m (one of the bonds is in sterling and has GBP 28.8m outstanding so this total € figure may change as exchange rates change) outstanding and the Minister said
“As the Deputy is aware the Government is committed to delivering a return to a successful vibrant economy. In this context I have indicated that there is no private sector involvement for senior bank paper or Irish Sovereign debt without the agreement of our external partners. This commitment has been agreed with out external partners and is now the basis on whichIreland’s future financing strategy is built. This strategy is working well as evidenced by the reduction in pricing of Irish Sovereign debt in the secondary markets and the recent successful bond exchange offer by the NTMA.
IBRC has confirmed that two unguaranteed senior bonds with a combined principal value of €0.6bn are scheduled to mature on 26 June 2012. IBRC’s position on its publicly traded securities remains unchanged. The Bank is contractually obliged to repay senior securities on their maturity dates.”
An altogether weak response which invokes sovereign debt, “agreement” with our external partners and the claim of a reduction in the pricing of sovereign debt – current 10-year yield is 7.4%, same as it was at the end of January 2012 and pretty much the same as the 7.5% in September/October 2011. Of course 7.4% for long term borrowing is not sustainable, but then again you would hardly characterize the arrangement imposed on this State by the ECB as an “agreement”. Though in the sense that this Government accepts the arrangement, it is an “agreement”
The two bonds payable on 26th June 2012 are the last of the very big bonds at the two bust banks, Anglo and INBS which of course have been merged together to form the new bank, the IBRC – thus far, Anglo has received a €29.3bn bailout and INBS has received €5.4bn. There are still billions repayable at AIB which we 99% own and which has had a €20bn bailout.The response above just highlights the impotence of this Government.
Minister Noonan was also asked for the identities of the bondholders and his response was
“As already indicated it is not possible to identify bond holders with any degree of certainty. Such securities are freely tradable once issued and therefore the issuer (i.e. the Bank) has no means of establishing the underlying ownership. These securities are publicly traded and dealt through market participants and settled by clearing house systems. An issuer does not have any access to the records of the clearing house. At maturity, the Bank will instruct its paying agent to transfer the funds due to the clearing house who will then distribute the funds to the holders of the securities as per their records.”
So on 26th June, 2012 a bank which is bust to the tune of €5.4bn so far, and which is 100% owned by this State and managed ultimately by the Minister for Finance, will pay €635m to bondholders (investors) whose identities we don’t know, investors who will receive 100% of their investment with interest. Ireland is in an IMF bailout programme, is running a 9% deficit and our debt:GDP will be 120% next year. If you haven’t heard a good Irish joke in a while, this must make up for it.
“Tonight with Vincent Browne” is on TV3 tonight at 11pm.
NAMA Wine Lake 
Let me get this straight… The Minister for Finance is saying that our paying unsecured investors is the basis for the troika loaning us money?
Or is his statement just poorly phrased?
Looing forward to VB with Ballyhea DOF: From P Sommerville Twitter DOF says: Tonight with Vincent Browne, hopefully will make it through in one piece.
watched Vincent Browne a little while ago. Fine Gael spokesman must have taken lesson from Terry Prone today.He did not let Ballyhea spokesman get to say much. Interesting to note, when discussing Mick Wallace tax evasion case ,that Fine Gael fiddled their tax for nine years. There was a rumour in the eighties that they even paid one of their leaders(the guy that was rumoured to have his gambling —sorry, Investments gone wrong—- forgiven his debt by AIB) under the counter in addition to his salary. Of course—nothing like that would happen now!!!!!
!At least the Ballyhea group got to explain that we did not get any money for free. Ireland got loans @ as it turns out–inflated interest. rates. Thank you folks. You have done us more of a service than all our politicians. It is time for the media and all of us to stop talking about a bailout. It is nothing of the sort .Maybe it is time to throw these guys,loaning us the money, out of the temple
I had no idea that people thought the bailout was a pure fund injection into Ireland. My perception of things is that people realise we are getting the money on loan, I had no clue this was not common knowledge? Hard to believe people think we got a handout?
I’ve come across a few people who thought the “bailout” was the troika saving poor little Ireland from starving.
I guess some people used Bertie’s definition of a bailout, as in when a few of his, ahem, friends, bailed him out when he was in, [cough] financial difficulties after the break-up of his marriage. There was never much mention of paying back the money in this instance.
RTE and the mainstream media also use the phrase “bailout”, without ever explaining the enforced-loan-with-high-interest-rates bit.
From a Government point-of-view, it might be harder to talk in public about our external “partners” if this bit had to be mentioned every time – much better to just say “bailout” and let people, if they so decide, believe they bailed us out.
@Kieran, you’re not alone, and I think University of Limerick lecturer Stephen Kinsella is on the record as saying it drives him mad to hear the term when in reality, these loans from the IMF and others are repayable in full at rates which deliver profits to the lenders. But “bailout” is not a term purely invented for Ireland, and it has historically been the case that the term is used for all IMF lending, even the UK’s programme in 1976 is referred to in the UK as a bailout
http://news.bbc.co.uk/1/hi/uk_politics/4553464.stm
Maybe as you say our difficulty is with “bailout” sounding a lot like “digout”!
Bailout or Loan?
If you would have drowned without it, it is a bailout. Simple as that.
Ireland wanted a ‘free’ bailout? ……
Isn’t that very sense of entitlement at the core of the problem?
“This commitment has been agreed with out external partners and is now the basis on whichIreland’s future financing strategy is built.”
We do not have external partners.
We certainly have external enemies.
the sovereign ‘bailout’ bailed-out private bank bonds (as well as our ongoing exchequer current account defecit) even after the shareholders got skinned (as per market norms).
The bonds are on our ankles and wrists now.
The ‘doorstep’ interview is linked,the ‘broad’ strategy of the current govt. is to ‘re-engineer’ the debt !
The conference video is here,i know you guys are just starved for appearances by Kenny,sorry no VB.
http://dublin.usembassy.gov/conference.html
http://www.merrionstreet.ie/index.php/2012/06/taoiseach-addresses-u-s-embassy-conference-levelling-the-playing-field-strengthening-irelands-competitiveness/?cat=3
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