Following on from the NTMA’s slidefest from a few days ago, here’s an interesting set of presentations that have just been released (apparently without a press release explaining who they were originally presented to but I think you can guess). There are presentations on Mortgage Arrears, SME Lending, Deleveraging, Funding, and a Banking Report Card. Enjoy.
I’m appearing at the Oireachtas Finance Committee this afternoon, along with Brian Lucey and Stephen Kinsella, to discuss ELA and promissory notes. Here‘s a copy of a briefing paper I have provided to the committee and here are my opening remarks.
I’m told that the meeting can be watched live online at this link by choosing Committee 4 and also on UPC channel 801.
Hopefully, this story is a sign that the €3.1 billion payment on March 31 can be deferred.
There is some discussion of this issue in the comments but it’s worth putting on the front page. A much-heralded part of December’s EU negotiations was the decision to change the language on Private Sector Involvement (PSI) in the ESM Treaty.
On December 9, Herman van Rumpoy said
our first approach to PSI, which had a very negative effect on debt markets is now officially over.
It was being replaced with the following
from now on we will strictly adhere to the IMF principles and practices
Sure enough, the new ESM Treaty states
In accordance with IMF practice, in exceptional cases an adequate and proportionate form of private sector involvement shall be considered in cases where stability support is provided accompanied by conditionality in the form of a macro-economic adjustment programme.
Some are arguing that this is effectively a commitment to limit PSI to Greece. I don’t see how this is a tenable assumption. As this FT Alphaville post discusses, there is no sense in which IMF procedures rule out PSI. Furthermore, bond markets are also clearly not interpreting the new ESM treaty in this fashion since Portuguese bond yields are still effectively pricing in a default.
It’s very hard to see how, if the stars end up aligning sufficiently badly for Ireland, that “an adequate and proportionate” haircut won’t get applied to private sovereign bond holders.
A newly-modified ESM Treaty has been signed. Documents are available here. One key aspect:
It is acknowledged and agreed that the granting of financial assistance in the framework of new programmes under the ESM will be conditional, as of 1 March 2013, on the ratification of the TSCG by the ESM Member concerned.
Viewers of the Vincent Browne show take heed!