Friday, June 21, 2013

Redemption Profile

The NTMA are going to very busy organising bond sales for the coming decades.  Here is a chart from the latest IMF review showing the impact that a €200 billion debt will have on redemptions.

Redemption Profile

Using their assumptions it can be seen that redemptions are going to average over €25 billion a year (which assumes an average maturity of around 8 years which is relatively long.) 

It is not clear that the above chart includes the redemption of the new bonds created through the Promissory Note swap in February.  These bonds begin to mature from 2037 on though the chart does include their sale by the Central Bank of Ireland into the private market beginning next year.

The above chart will be changed by today’s formal agreement to extend the maturities of the EFSM/EFSF loans Ireland has drawn down from the EU/EZ.  The will have a positive impact in the medium term as loans for the coming decade are pushed out but, as shown above, the rollovers that will be required in the 2020s are going to be very substantial.

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