Ireland to Borrow at 5.8%

Scofflaw

Blowfish wrote: »

The money to cover the cost of the deficit during the 4 years has to come from somewhere, which is what the 50bn is for.

Indeed - the assumption being that we won't be able to borrow from the bond markets at a comparable rate. If the bond market rates do drop below it, we go to the bond markets instead.

The €50bn covers the following deficits in government spending:

Year 1: c.€20bn
Year 2: c.€14bn
Year 3: c.€11bn
Year 4: c.€8bn

Total: €53bn

cordially,
Scoflaw

Liam Byrne

zig wrote: »

I think we've already established that this is not the case.

Where ?

zig wrote: »

well my only source for this particular issue is here and Politics.ie and i think we only pay that interest rate on the money we draw down, meaning 5.8% of whatever money is taken out. The pension fund will have nothing to do with the money we take out. Im still open to correction on this.

That's far too much of a dearth of sources and a lot of "think and open to correction" in to justify a claim that "we've already established" anything.

What did you even base your claim that "the pension fund will have nothing to do with the money we take out" on ?

mrgaa1

and when then next new government comes in they won't change a thing - they'll blame the previous government for a few years and then as the country is settling down they'll take some credit.
We were lucky to get away with 5.8% interest rate - so lets get on with it.
The banks must start lending as they will have to start hoarding money for the 12% they must need and they need to lend to make money so that their customers can create work, create employment.
For the life of me I can't figure the role of the financial regulator in all this - they didn't much regulation in the past, can't see them doing much in the future.
I don't really care who is in the next government - just put someone up front who can lead by example.
WE NEED LEADERSHIP!!!!

BeeDI

What on earth is the big fuss here.

The so called bailout is a pot of money borrowed at a "blended rate" of 5.8%. It is money we would have borrowed anyway, over the next 3 years!

Our average interest rate on the money we already borrowed year to date on the bond markets is 4.7%. So the new money is 1.1% above the average YTD from the markets.

Now Michael Sommers, has the view that as we now have access to money, we probably will have the chance to go back to the narkets and borrow at less than 5.8%. Lets split the difference for arguments sake, and we can get it at 5.25% (half way between 4.7 and 5.8%)

Seems to me in all the circumstances, not such a bad outcome.

B

waxon-waxoff

Rates for Irish bonds have not dropped this morning so the market is not convinced. Spanish and Portugese bonds are down a little. The fear that we cant afford the repayments is not going away.

zig

Liam Byrne wrote: »

Where ?



That's far too much of a dearth of sources and a lot of "think and open to correction" in to justify a claim that "we've already established" anything.

What did you even base your claim that "the pension fund will have nothing to do with the money we take out" on ?

As I said , my only source on that issue is here and p.ie so I understand I may be wrong, hence my stating that I was open to correction. My first post wasnt meant to sound like I was definitely right, apologies if it did.

ei.sdraob

the markets are definitely not convinced

only way out now so is default


all of this bank debt should never have been taken on board, i have been going on about this for years :mad:

BeeDI

waxon-waxoff wrote: »

Rates for Irish bonds have not dropped this morning so the market is not convinced. Spanish and Portugese bonds are down a little. The fear that we cant afford the repayments is not going away.

Budget not yet passed the combined forces of Enda, Gilmore, Shinners, South Kerry Causa Nostra, Dan Breen ... I mean Michael Lowrey Tipperary, few FF rats jumping off the ship, plus a few other independents.

Enda and Gilly, now have a bigger incentive to block the budget, since the pension reserve fund they were going to use to have a party has been sunk into the bank black hole.

So bond markets must wait for budget to pass or not before making mind up. If budget fails, they have to wait for election result. Assuming Enda and Gilly get the cars and the perks, they have to see what the colour of the dogs dinner is after they try to renegotiate the bail out deal!

Leiva

ei.sdraob wrote: »

the markets are definitely not convinced

only way out now so is default


all of this bank debt should never have been taken on board, i have been going on about this for years :mad:

The sooner the better people realise that this problem is much bigger than Ireland the better.

The euro is in crisis and it's been disguised as an Irish cancer that's gonna kill the whole of Europe .. Bollxo I say .

As far as the markets are concerned Ireland is so last week .
We have done everything possible to resolve our finances and look at the markets , no improvement !
Ireland is irrelevant , so is Portugal (next).
Until a big player like Spain can show it's able to stablise then the blame game and labelling will move from small nation to small nation.

Ireland is to small and irrelevant when it comes to resolving the crisis that the Euro finds itself in , but not to small or irrelevant enough to be labelled a contaigent.

DWCommuter

Who voted yes to the Maastricht Treaty in 92?:D:D:D

ei.sdraob

con·ta·gion (kn-tjn)
n.
1.
a. Disease transmission by direct or indirect contact.

sigh

weren't the Irish and EU banks given a clean bill of health only a few months after "stress" tests.


that's why there is no confidence in us and others, we and the eu lied about the state of the banks and the tests were a farce

we are no in same situation as 2 years ago where no one knows how healthy/unhealthy the banks are, except worse since now some banks are part of states

flynnlives

newmug wrote: »

What are YOU on about? Part of the deal is that banks have to be reformed. The 10BN will prob from the NPRF, so 0% interest. I have a sneaky suspicion that the reason 85BN was the figure agreed upon is that that is the collective value of mortgages in Ireland, so they're taking a default into account, IF it happens. Why do you think its inevitable, and if it is, why hasn't it happened already?

EDIT: Sneaky bit of editing there flynn. Where did it say 50BN is being used to run the country? The 4 year plan is supposed to have that covered. And no need for insults about "understanding". You're not an economist.

Here, you dont have a clue.
You clearly dont know anything about this deal or anything about economics.

Leiva

ei.sdraob wrote: »

sigh



we are no in same situation as 2 years ago where no one knows how

Now..
at the present time or moment

flynnlives

I dont accept that.....going forward...........with our partners in europe....

Fat_Fingers

flynnlives wrote: »

I dont accept that.....going forward...........with our partners in europe....

yes... and we are where we are.

newmug

BeeDI wrote: »

What on earth is the big fuss here.

The so called bailout is a pot of money borrowed at a "blended rate" of 5.8%. It is money we would have borrowed anyway, over the next 3 years!

Our average interest rate on the money we already borrowed year to date on the bond markets is 4.7%. So the new money is 1.1% above the average YTD from the markets.

Now Michael Sommers, has the view that as we now have access to money, we probably will have the chance to go back to the narkets and borrow at less than 5.8%. Lets split the difference for arguments sake, and we can get it at 5.25% (half way between 4.7 and 5.8%)

Seems to me in all the circumstances, not such a bad outcome.

B

NAIL HEAD HAMMER

ei.sdraob wrote: »

the markets are definitely not convinced

only way out now so is default

We have 4 YEARS to convince the markets. 4 YEARS! Its not going to change overnight.



To all these doomsdayers, why in the name of all thats logical do you think ANYONE would lend ANYTHING to a person/company/country who wouldn't pay it back? I wouldn't give a mate a tenner if I thought I'd never see it again, nevermind 85 BILLION!

ei.sdraob

newmug wrote: »

We have 4 YEARS to convince the markets. 4 YEARS! Its not going to change overnight.



To all these doomsdayers, why in the name of all thats logical do you think ANYONE would lend ANYTHING to a person/company/country who wouldn't pay it back? I wouldn't give a mate a tenner if I thought I'd never see it again, nevermind 85 BILLION!

We spent 2 years "convincing" them by doing nothing, you are naive if you think any government will have the balls to go ahead with with 4 year plan. Politicians are incapable of cutting that much is evident.

PhatPiggins

newmug wrote: »

NAIL HEAD HAMMER





We have 4 YEARS to convince the markets. 4 YEARS! Its not going to change overnight.



To all these doomsdayers, why in the name of all thats logical do you think ANYONE would lend ANYTHING to a person/company/country who wouldn't pay it back? I wouldn't give a mate a tenner if I thought I'd never see it again, nevermind 85 BILLION!

How do you see us funding government borrowing in that 4 years?

Liam Byrne

BeeDI wrote: »

......they have to see what the colour of the dogs dinner is after they try to renegotiate the bail out deal!

I was going to object until I realised the truth in your statement......FG & Labour are the dog's dinner, with the current shower being the remains of said dinner after it is eaten, digested and expelled.

Rented Mule

Mr.Micro wrote: »

My answer to that would be look who are in charge....the Blues Brothers.....aka Biffo and Lenny.

Why would you insult Jake and Elwood by lumping them in with those two clowns ?

hmmm

BeeDI wrote: »

Seems to me in all the circumstances, not such a bad outcome.

I'm no fan of the current government but there seems to be an awful lot of people here who are anxious to dance on the corpse of the Irish economy irrespective of what happened. We could have got the money for free and there would be outrage at the "condescending way we've been treated".

This money buys us time to to dig ourselves out of the hole we created ourselves. It gives us at least 4 years to return to the bond markets, or preferably to fix our deficit so we don't need to return at all. The actions of the SE Asian exporting nations following their own financial crisis were instructive for Ireland because they had similar problems to ours. Massive over-investment and a spiralling deficit. With the help of the IMF and a resolution not to have to go begging again, they rebalanced their economies towards exports and away from foreign financed infrastructure investment, and since then have built up significant foreign reserves to allow them come through the current crisis relatively unscathed. This book has a good description of the process.
http://www.ft.com/indepth/business-book-award-2010

later12

hmmm wrote: »

It gives us at least 4 years to return to the bond markets, or preferably to fix our deficit so we don't need to return at all.

We do not have four years of funding before returning to the bondmarkets, we will (hopefully) be back before that time.

flynnlives

Originally Posted by BeeDI View Post
Seems to me in all the circumstances, not such a bad outcome.

Tell me, how is paying in full, the private debts of others, not such a bad outcome

Seriously, think for a second, by 2014 20% of the tax you pay will be going to pay for this!

dr24444

Brian Cowen doesn't play Monopoly, because when he plays everybody losses.

Brian Lenihan doesn't play Monopoly, because he's useless with the money.

Mary Coughlan doesn't play Monopoly, because she has to leave Brian Cowen Win.

John o Donoghue doesn't play Monopoly, because he block books all the hotel rooms.


:mad::mad:

99nsr125

Kintarō Hattori wrote: »

Why are we paying a higher interest rate on a smaller amount than Greece?

First off, it's a crappy deal for us for numerous reasons, however

5.7-ish% is the average rate over the last decade or so that Irish
bonds have yielded and co-incidently 5.2% is Greece's 10 year
average. Unusual co-incidence eh!

So from that perspective it is a fair deal. If it was only to be used to
finance our government deficit people would be pointing this out.

It's the circa 100 Billion bank related debt that'll suck 5 Billion outta the
economy for the next 25 years.

Our hope now for a speedy resolution is for Spain (Although I think it might
be Italy not Spain that goes under) to default and the EU
to be forced into debt for equity and debt restructuring/write off

zig

99nsr125 wrote: »

Our hope now for a speedy resolution is for Spain (Although I think it might
be Italy not Spain that goes under) to default and the EU
to be forced into debt for equity and debt restructuring/write off

Im not sure if these countries will simply default, but something will have to be addressed soon, if you look at any of the PIIGS, the 10 year bond interest rates have all risen sharply in November. I think Portugal is looking the most likely to need help next.

Portugal: http://www.bloomberg.com/apps/quote?ticker=GSPT10YR:IND
Italy: http://www.bloomberg.com/apps/quote?ticker=GBTPGR10:IND
Ireland: http://www.bloomberg.com/apps/quote?ticker=GIGB10YR:IND
Greece: http://www.bloomberg.com/apps/quote?ticker=GGGB10YR:IND
Spain: http://www.bloomberg.com/apps/quote?ticker=GSPG10YR:IND