Thursday 19 July 2018

State cancels €500m bond, announces buyback


Donal O’Donovan

The State has bought back and now cancelled €500m of bonds originally issued as part of the controversial liquidation of IBRC.

The National Treasury Management Agency (NTMA) announces the cancellation of €500m of the Irish Floating Rate Treasury Bond due to mature on 18 June 2041. It means no further interest payments will have to be made in relation to the debt. Its thought the NTMA has now bought back and cancelled as much as €4bn from the Central Bank.

The cash paid to the Central Bank is essentially destroyed, reducing the total amount of money in the financial system. 

The bonds involved are part of the €25bn of government bonds used to pay off the Central Bank for cancelling the so called Anglo Irish Bank promissory note, an earlier government debt used to rescue the bust lender.

When the renamed IBRC was put into liquidation in 2013, the promissory notes had to be paid back with the new debt. Under pressure from the European Central Bank, the Central Bank here, has been selling off the bonds, though it is thought to still hold around €21.5bn of the taxpayer owed debt.

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