Author: Seamus Coffey

The opening address by Governor Honohan at today’s meeting of the Joint Oireachtas Committee on Finance, Public Expenditure and Reform is here.  The transcript of the meeting will be available in due course. [UPDATE: The transcript is here.]

There are several topics briefly covered in the opening address. On the Promissory Notes he says:

… there has been a very intensive process of discussion and negotiation on this matter, which is one of the two main thrusts of the Government’s policy to have a euro area review of the indebtedness arising out of the banking crisis. There is considerable goodwill from all interlocutors in this process. Nevertheless, it has not been easy to find a generally acceptable solution. Taking into account both the statutory position and wider policy stance of the ECB, an initiative of this type will be novel and as such challenging. Using our knowledge of central banking law and practice, we have been working carefully to build understanding and confidence around a set of proposed transactions designed to deliver for Ireland, while not taking other decision makers too far out of their comfort zone. The ECB is an organisation that seeks to proceed as far as possible by consensus, and it is not surprising that this work has been taking quite a while. In fact, what we have designed is, I believe, largely in the interests of the eurosystem as a whole.

In the subsequent words of Governor Honohan it seems that any deal is not “done and dusted”.

The sale of €1 billion of the Convertible Contingent Capital notes that the Exchequer purchased as part of the 2011 PCAR recapitalisation has gone through today.  The announcement from the Department of Finance is here, while a Bank of Ireland report providing some details of the sale is here.

The notes had an annual yield of 10%.  There are €2 billion remaining in AIB/EBS and PTSB.  Is the sale of the BOI portion a good deal?

The NTMA have published their Results and Business Review for 2012.  The value of the ordinary and preference shares held by the NPRF in AIB and BOI is estimated to be €8.6 billion, up from €8.1 billion at the end of the third quarter.  The value of the “discretionary fund” is €6.1 billion.

At the end of the year the balance in the Exchequer and Other Accounts was €20 billion. The Exchequer Borrowing Requirement for 2013 is projected to be €15.4 billion (or €18.5 billion if two Promissory Note payments are made).

This week’s activities will have pushed these balances to around €23.5 billion. The NTMA plan on raising another €7.5 billion of funds with medium- and long-term bonds during the year and the final €11.5 billion of EU/IMF programme loans are also scheduled to be drawn down.  With a €5 billion bond payment due in April this would result in cash balances of €22 billion (or €19 billion) at the end of the year.

UPDATE: Further statement from the Department of Finance on BOI bond sale here.

The NTMA have announced:

NTMA Announces Syndicated Tap of 2017 Bond

7 January 2013 – The National Treasury Management Agency (NTMA) has today announced to the market that it will seek to raise new money through a syndicated tap of its 2017 Treasury Bond in the near future, subject to market conditions.

A syndicated tap is the sale, at a pre-determined price, of additional amounts of an existing bond through a number of appointed banks and is open to all institutional investors. The NTMA has mandated Barclays, Danske, Davy, RBS and Société Générale as joint lead managers for the transaction, details of which will be announced in due course.

The finer details are scarce for the moment.  Someone referred to it as a “massive step”.  The indicative five-year yield as calculated by Bloomberg is here.

UPDATE: Results here.

The Central Bank have released the Q3 2012 update of the Mortgage Arrears Statistics.  The arrears situation continues to deteriorate.  There is some useful new information in this release.  On owner-occupier loans a further breakdown is given of loans that are more than 180 days in arrears.  This is the number of accounts in each sub-category:

• In arrears 181 to 360 days:  23,035
• In arrears 361 to 720 days: 24,825
• In arrears over 720 days: 19,541

The accounts in the final category are an average of €40,000 behind on their repayments.  Loans in arrears over 90 days are now equal to 15.1% of the total balance of owner-occupier mortgages.  The total stock of owner-occupier mortgages has declined from €118.6 billion in Q3 2009 to €111.2 billion in Q3 2012.

Some additional forbearance measures are added to the list usually provided.  These are for a permanent interest rate reduction and a split mortgage but the numbers of these provided remain small at 194 and 12 respectively.  Of the 153 owner-occupied properties repossessed during the quarter 70 per cent were by way of a voluntary surrender.

Details are also provided on buy-to-let loans for the first time.  A spreadsheet with the data for both loan types is available here.