Central Bank nears halfway point of IBRC-linked bond sales

Bank has sold €12bn of the bonds since 2014 to National Treasury Management Agency

The Central Bank has been coming under pressure from the European Central Bank to sell the bonds as quickly as possible in order to ease concerns that the financing amounts to monetary financing, which is prohibited in the euro zone.

The Central Bank has been coming under pressure from the European Central Bank to sell the bonds as quickly as possible in order to ease concerns that the financing amounts to monetary financing, which is prohibited in the euro zone.

 

The Central Bank has sold a further €500 million of bonds linked to the restructuring five years ago of the State’s bailout of the now-defunct Anglo Irish Bank.

This brings the Central Bank close to the midway point of selling off €25 billion of Government bonds it received in February 2013 under a restructuring of so-called promissory notes, which had been used by the State during the financial crisis to rescue Anglo. The bank was subsequently renamed Irish Bank Resolution Corporation (IBRC).

The Central Bank has sold €12 billion of the bonds since 2014 to the National Treasury Management Agency (NTMA), which has immediately cancelled the notes.

The Central Bank has been able to make large profits selling the bonds at a premium to the price at which they were issued, due to government bond yields across the euro zone falling dramatically since 2013. However, the NTMA has had to raise borrowings in global markets to finance the purchases.

IBRC had been using the promissory notes as collateral for emergency Central Bank funding up until February 2013, when it was put into liquidation. As part of the liquidation deal, the State replaced the notes with long-term bonds of up to 40 years in duration.

The Central Bank has been coming under pressure from the European Central Bank to sell the bonds as quickly as possible in order to ease concerns that the financing amounts to monetary financing, which is prohibited in the euro zone.