Central Bank down to last €500m of IBRC-linked bonds

The Central Bank has sold a further €500 million of bonds linked to the restructuring a decade ago of the taxpayer bailout of the now-defunct Anglo Irish Bank and Irish Nationwide Building Society (INBS).

This means that the Central Bank has sold off 98 per cent of about €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 and INBS. It is now down to just €500 million of such bonds.

Anglo was renamed Irish Bank Resolution Corporation (IBRC) in 2011 and subsequently took over the remains of INBS.

The Central Bank has sold €24.5 billion of the bonds since 2014, including Tuesday’s transaction, to the National Treasury Management Agency (NTMA), which has immediately cancelled the notes.

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The bank has made multibillion-euro profits from the bond sales, as the value of the bonds surged in the past decade as the Government’s borrowing costs on the financial markets plummeted. Some 80 per cent of the profits have been handed over to the exchequer.

Still, the NTMA has had to raise money to buy the bonds in the long-term bond markets – albeit at much lower interest rates than what were attached to the original bonds.

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IBRC had been using the promissory notes as collateral for emergency Central Bank funding 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 was under pressure from the European Central Bank from the outset 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.