Thursday 21 November 2019

Promises . . . promises

Bloomberg says Ireland is considering refinancing the notorious Anglo Irish promissory notes with a new 40-year government bond.

The Punt takes a fairly sceptical view on this one.

The deal outlined would shrink the €3.1bn-a-year cost of honouring the Anglo Irish promissory note by spreading the repayments over an extra 27 years.

Good, but hardly novel.

When the first Anglo payment was due in March, Finance Minister Michael Noonan did much the same thing, borrowing from Bank of Ireland to meet the bill by issuing a new bond.

The latest thinking, according to Bloomberg, is a scaled-up version of the March deal.

Replace one medium-term debt -- the promissory note -- with longer-term debt.

No new help from Europe, no cut in the national debt, nothing not already under discussion long before June 29, when European leaders committed to reassess the cost of the Irish bailout. Have we really got nowhere on this since March?

It's a sad fact that reporters and traders waste more time than is healthy trying to trace the likely origin of news reports. The best guide is the oldest -- who benefits?

Certainly a disappointing trip to Cyprus last weekend left Mr Noonan's department under pressure to be seen making headway on the bank issues -- but progress might be a stretch in this case.

More interestingly, it's the ECB who would be the big winner under the Bloomberg plan.

Central bankers are desperate to cut help to Irish banks through Emergency Liquidity Assistance (ELA), rescue loans that reek of money printing in the more Teutonic parts of the continent.

Under the Bloomberg plan, ELA would be wiped out, replaced with the altogether more satisfactory, for the ECB at any rate, heft of old fashioned Irish government debt.

Irish Independent

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