(Corrects day in first paragraph)
LONDON Feb 7 Ireland's Prime Minister Enda
Kenny on Thursday said his country had taken "an historic step
on the road to economic recovery" by striking a deal with the
European Central Bank to ease the burden of debts it took on to
rescue Anglo Irish Bank.
Following are the key points of the deal that have been
announced so far:
* Anglo Irish Bank, more recently known as IBRC, is being
* Most of the Central Bank of Ireland's 40 billion euro
exposure to the former Anglo Irish Bank will be repaid with a
sovereign bond from the government that replaces the 25 billion
euro 'promissory note' the Central Bank had been holding as
collateral against the borrowings.
* The Central Bank's claim is also offset by a 3.1 billion
euro 2025 bond that IBRC received in lieu of a cash payment for
a promissory note repayment that fell due in March 2012.
* The remainder of the Central Bank's exposure to IBRC will
be largely covered by special bonds issued by Ireland's bad bank
Nama, which has until mid-2013 to either sell IBRC's remaining
assets to private buyers or hand them over to Nama.
* The annual cost of paying off Anglo's bailout will fall by
"approximately 1 billion euro ... over the coming years", Kenny
said in his announcement to the parliament.
* This suggests payments will be about 2 billion euros a
year, compared with the current 3.1 billion. Kenny said this
would ease Ireland's budgetary pressures.
* Payments on Anglo's bailout are being stretched out over
40 years - 22 years longer than under the old plan. The average
maturity of the promissory note was less than 8 years, while the
average maturity of the new bonds is more than 34 years.
* The new government bonds being issued are made up of three
tranches of 2 billion euros maturing after 25, 28 and 30 years,
three of 3 billion euros maturing after 32, 34 and 36 years and
two of 5 billion euros maturing after 38 and 40 years.
* The payments on the debt move to an interest-only system,
and the outstanding principal on the new government bonds will
only be repaid when they reach maturity.
* If Ireland sticks to its spending plans, the deal is
forecast to bring the country's budget deficit down to 4.5
percent in 2014 from an earlier projection of 5.1 percent, and
to 2.4 percent from 2.9 percent in 2015, a presentation from the
Department of Finance showed.
* The Central Bank has agreed to sell off a minimum amount
of bonds every year, described by the head of Ireland's
department of finance John Moran as a "very light disposition"
in its early stages.
* The minimum sales are: 500 million euros worth to be sold
by the end of 2014, at least 500 million euros a year from 2015
to 2018, at least 1 billion euros a year will be sold from 2019
to 2023, and after 2024 at least 2 billion a year will be sold.
* Sales of the bonds must be done in a way that is "not
disruptive to financial stability", Moran said.
(Reporting By Laura Noonan; Editing by Hugh Lawson)