Written Answers - EU-IMF Agreement

Thursday, 19 July 2012

Dáil Éireann Debate
Vol. 773 No. 3

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  52.  Deputy Pearse Doherty  Information on Pearse Doherty  Zoom on Pearse Doherty   asked the Minister for Finance  Information on Michael Noonan  Zoom on Michael Noonan   the rate of interest on Ireland’s repayments to the EFSF; and the way this compares with the rate of interest being offered to Spain. [35937/12]

Minister for Finance (Deputy Michael Noonan): Information on Michael Noonan  Zoom on Michael Noonan  The interest rates on the loans from the EFSF drawn down to date are shown in the following table:

Lender Nominal Loan Amount Date of Draw Down Maturity Date Term from Date of Drawdown Interest Rate
European Financial Stability Facility (EFSF) €4.19 billion1 01-Feb-11 18-Jul-16 5.5 yrs 2.75%
€3.00 billion 14-Nov-11 04-Feb-22 10.2yrs 3.60%
€1.27 billion 12-Jan-12 04-Feb-15 3.1yrs 1.73%
€0.48 billion2 19-Jul-12 19-Jul-41 29 yrs Pooled Floating Interest rate3
€1.00 billion 15-Mar-12 23-Aug-12 0.4yrs 0.29%
€2.80 billion 03-Apr-12 03-Apr-37 25yrs Pooled Floating Interest rate3
EFSF Total €12.74 billion 11.1yr weighted average life

1. A prepaid margin of €0.53 billion was deducted from the loan of €4.19 billion drawdown on 1 February 2011 giving a net liability of €3.66 billion. This margin prepayment will be refunded to Ireland in 2016.

2. The loan of €0.48 billion was rolled today (19/07/12) and has a maturity date of 19-Jul-41. It has a pooled floating interest rate.

3. Short Term EFSF Funding of €1.0 billion maturing in 2012 is due to be replaced by longer term funding at a pooled floating interest rate which will be calculated under the EFSF’s diversified funding strategy. The EFSF funding provided to Ireland under pooled issuance comes from a variety of fundings. The EFSF rate for June was 1.63%. The EFSF loan of €1.27bn maturing in 2015 is also subject to rollover at a floating rate.

[997]A final decision on the process of Spain’s bank recapitalisation funding has yet to be taken. However, as this funding is being provided in the first instance by the European Financial Stability Facility (EFSF), the relevant pricing policies will apply. Spain, in common with other countries in receipt of EFSF funding, will pay the rate determined by the EFSF’s cost of funding, which is defined in the EFSF Master Financial Assistance Facility Agreement as follows:

“...the effective (after hedging) average cost of funding incurred by EFSF in funding such Financial Assistance as determined by EFSF and allocated to the relevant Financial Assistance pursuant to the Diversified Funding Strategy. The EFSF Cost of Funding shall be calculated by EFSF by adding (i) EFSF’s (after hedging) average cost of funding the relevant Financial Assistance, expressed as a rate per annum; for the avoidance of doubt, in the case of discount Funding Instruments (e.g. zero-coupon notes), cost of funding shall be calculated with reference to the nominal value of the relevant discount Funding Instrument, (ii) the annual Service Fee (with effect from the first anniversary of the Disbursement Date of the relevant Financial Assistance), (iii) the Commitment Fee (iv) any Guarantee Commission Fee accrued during the relevant period and (v) any other financing costs, margin, negative carry, losses, hedging costs or other costs, fees or expenses.”

Subject to the final decision on the price of Spain’s EFSF funding, there is no reason to believe that the cost of EFSF funds for Spain will be any more favourable than that now available for Ireland.

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