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Promissory note deal emerging, emergency legislation for Dail this evening, time to focus on deficit now or is deal good enough?


cyberianpan

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Promissory note deal emerging, emergency legislation for Dail this evening, time to focus on deficit now or is deal good enough?

### Story

Cliff Taylor of The Business Post has the scoop
The Sunday Business Post
The government is understood to be in the final stages of talks with the ECB on the restructuring of promissory note payments, with the prospect of special financial legislation going through the Oireachtas in relation to some restructuring of IBRC as part of any deal.
and RTE have more detail : Govt set to liquidate Anglo as part of debt deal - RTÉ News

Anglo /IBRC will be liquidated with Nama taking on its assets, though the our Central Bank may assume some of the balance sheet. Also the government will issue new securities to cover the liquidation shortfall. Here is the legislation to liquidate the IBRC : Irish Bank Resolution Corporation Bill 2013 (Number 9 of 2013) - Tithe an Oireachtais Also here is Michael Noonan's speech which serves as a useful overview of the Bill.

ECB sign off will be from formal council meeting tomorrow, and informally at tonight's working dinner. ECB offers Ireland deal on Anglo notes - RTÉ News

The deal will likely see longer repayment schedule (25-40 years) at lower interest (a floating rate in the order of 3 to 3.5%). Key to the deal will be how the actual financial figures showing the reduction in our liabilities in NPV. No sign of this yet, and it may only emerge post liquidation. 

### Analysis

1) Here's a useful old column by Karl Whelan that explains the kernel of the deal : How Much Would Ireland Benefit from Replacing the Promissory Notes with a Long-Term Bond?

2) Are folks happy that this complex financial engineering will be rushed through as emergency legislation with relatively little scrutiny ? Especially as just a day ago Noonan himself said we still had 7 or 8 weeks left ? There are two theories why
a) Negotiating brinksmanship with ECB
b) Legal reasons: that as news of deal leaked interested parties might seek to take action against IBRC

3) Will this deal be good enough for Labour malcontents - and will Ireland be able to focus efforts on deficit reduction as is so badly needed ?


cYp
 
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sport02

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DJ FX Trader ‏@djfxtrader: Irish Proposal Involves Issuance of New Bond With Duration "In and Around" 15 Years; Swap New Bond for Promissory Notes, Says WSJ Source
 

He3

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Dealing with a promissory note promising to pay money to IBRC by issuing a sovereign bond promising to pay money to the bond buyer(s)?

There is a problem right there.

Anyway, let's see the details.
 

Sync

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Deal on Anglo bank debt imminent - Independent.ie

Indo have more speculation:

The deal is expected to follow the original approach of deferring payments on the remaining €28bn of IOUs but with some payments coming earlier so as not to break rules about ECB lending to governments.
If they make a deal and are able to translate it for voters (This will save us X a year and we'll be able to save Y jobs/hospitals/garda stations per year) then it's time for the opposition to start thinking about 2020.
 
D

Dylan2010

Unless its 1€ per year for the next 15bn years, it will still be a rip off.Anyone remember the Simpsons episode where Homer buys the car for "low low" monthly payments and the balloon payment at the end...Come to think of it Homer Simpson for finance minister! he couldnt do any worse.
 

ibis

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40 year bond deal was rejected by the ECB last Friday.

15 year bond deal is now being mooted?
What about the EFSF/ESM mechanism?
As far as I know, the ESM can't get involved in IBRC because it's a wind-up vehicle - it could only buy our shares in the live banks off us.
 

FakeViking

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Lenny must be rocking in his grave, it seems that another of his famous landmines has been defused.
 

Keith-M

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Let's see the details, remembering that we would not be dealing with this debt unless the ECB had put a gun to our heads and refused to allow us to let Anglo go under as it should have.
 

corelli

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RTE Radio 1 reporting that the deal with involve, yepeeeee, liquidating Anglo.
 

Ribeye

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There will be no deal, only fudge,

Any deal that would lessen the burden on us would reduce the NPV of the Note, which equals monetary financing,

And the ECB won't be havin any of that,
 
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ibis

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Let's see the details, remembering that we would not be dealing with this debt unless the ECB had put a gun to our heads and refused to allow us to let Anglo go under as it should have.
Christ, can some people really not tell the difference between 2010 and 2008?
 

Volatire

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The only thing which matters is how by much the npv of of PN cashflows has changed in our favour.
 

Sync

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There will be no deal, only fudge,

Any deal that would be lessen the burden on us would reduce the NPV of the Note, which equals monetary financing,

And the ECB won't be havin any of that,
I love how you obviously haven't read either article or listened to the radio piece.
 
D

Dylan2010

Lenny must be rocking in his grave, it seems that another of his famous landmines has been defused.
no! its still pass the f***ing hand granade, it just has a longer fuse. I see its set to go off just as my kids are coming out of college.
 

Ribeye

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RTE Radio 1 reporting that the deal with involve, yepeeeee, liquidating Anglo.
Nooooooooo, it's systemmmmmiiiiiccccc!!!


Quick, to the Ribmobile, I must get to an ATM before the panic starts!!!!!

:)
 

ruserious

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Ultimately, I will judge any deal on the effects on the cuts in the budget.
 

punchdrunk

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There will be no deal, only fudge,

Any deal that would be lessen the burden on us would reduce the NPV of the Note, which equals monetary financing,

And the ECB won't be havin any of that,
You love a diet of bad news. You should go on the Vincent Browne programme. You would be hero to Vinnie the doom and gloom apostle. Every day you worry too much you help shorten your life.
 

emulator

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Let's see the details, remembering that we would not be dealing with this debt unless the ECB had put a gun to our heads and refused to allow us to let Anglo go under as it should have.
It shouldn't have been guaranteed in the first place.... but keep trying to revise history, it's fun to watch.
 

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