Deal on €3bn Anglo payout is ‘imminent’
Central Bank chief says debt will be delayed until 2025
A DEAL postponing the €3.06million payment on Anglo promissory notes – due in just three days’ time – will be announced by tomorrow.
The Irish Daily Mail has learned that negotiations are almost complete to delay the payment until 2025.
Governor of the Central Bank, Patrick Honohan, appeared before the Oireachtas finance committee yesterday and said the deal to delay the repayment for 13 years is all but sealed, apart from a few technical difficulties.
Last night sources in the Department of Finance said an announce- ment would be made by tomorrow evening at the latest, but than negotiations were virtually complete.
And Mr Honohan was confident a deal was ‘going to happen’ ahead of Saturday’s looming deadline.
Under the likely agreement, a long-term Irish Government bond would be issued in exchange for the promissory note. Such a swap would help to ease the financial strain, by spreading the cost. The long-term bond would then allow the Government breathing space while negotiating for better terms on the remaining promissory notes – worth €28.1billion, or €48billion with interest.
Irish Bank Resolution Corporation, formerly Anglo, uses the promissory notes as collateral to borrow emergency loans from the Irish Central Bank.
Mr Honohan emphasised that the worsening economic climate underlines the importance of securing a fairer deal. He said: ‘The sequence of annual cash payments by the Government of €3.06billion envisaged for the coming years in the promissory notes has become a risk to financial stability.
‘The Central Bank has been working vigorously with the ECB and other parties on a mechanism for ensuring such a result in a manner that is at an acceptable cost to Ireland.’ Mr Honohan added: ‘While some difficulties still need to be resolved, it now seems likely that this effort will be successful.’
In response to questions from Fianna Fáil’s Michael Mcgrath asking him how confident he was that a payment could actually be avoided this weekend, Mr Honohan said he thinks a deal will happen. ‘There are matters that I cannot talk about in public, but I think it’s going to happen,’ he said.
‘The use of a long-term bond is a major step forward… We’re only talking
‘It seems likely it will be successful’
about a fraction of the total promissories amount, but relatively, it’s a good deal.’
Sinn Féin’s Pearse Doherty said he was concerned that the Government bond that would replace the promissory note would have a pricey interest rate of 6.8 per cent and could potentially be sold on by IBRC.
Mr Honohan confirmed the interest rate Mr Doherty quoted was largely correct, but he said it was not his decision whether IBRC would be allowed sell. He said the Minister for Finance, would not like to see a third party profit on this deal, but had the powers to ensure such a situation never arose.
Mr Honohan was appearing before the committee yesterday following an embarrassing botched invite a fortnight ago. Fine Gael backbencher Peter Mathews proposed a motion to invite Mr Honohan to appear, but then had to vote against his own motion or defy the party whip. However, a farcical situation ensued when a number of Fine Gael TDS were locked out for the committee vote and Mr Mathews’ original motion was then passed by 11-9, resulting in a rare defeat for the Government.
Meanwhile, an electrician and a plasterer went to the High Court yesterday in a bid to win a temporary injunction that would have stopped the €3billion payment to IBRC. Ben Gilroy and John Squires claimed it was part of an ‘odious debt’ that did not benefit the people of Ireland. Judge Mary Laffoy said there was no urgency to the application, and that she would not make an order without first hearing from the State.