Promises, promises

26 March 2012 By Hugo Dixon Follow @hugodixon

Ireland is trying to restructure the fearfully complex promissory notes it issued to bail out its banks. Ideally, it would like to hang onto 31 billion euros of cheap Eurosystem money for 30 years. While that’s too much to expect, there should be scope for compromise.

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The European Central Bank failed to reach a decision on March 22 on whether to let the Irish government delay a 3.1 billion euro payment it is supposed to make to the Irish Bank Resolution Corporation (IBRC) on March 31.
This is scheduled to be the second payment on 31 billion euros of promissory notes that Dublin issued to Anglo Irish and Irish Nationwide Building Society, near bankrupt banks, to shore up their capital in 2010. Anglo Irish and INBS were merged into IBRC last year.
The Irish government has proposed that instead of making a cash payment to IBRC it should issue it with a bond. The bond would mature in 2025, according to Reuters.
Michael Noonan, the Irish finance minister, told parliament on March 22 that he was still hopeful that the ECB would agree to the proposal. He said negotiations were continuing.
Ireland’s proposal is part of a wider plan to renegotiate the terms of the entire 31 billion euros of promissory notes.
(Research by Christine Murray)

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