Sept. 28 (Bloomberg) -- Ireland is due to pay Anglo Irish Bank Corp. and Irish Nationwide Building Society 17 billion euros of interest over 20 years on 31 billion euros of promissory notes it used to bail out the lenders, according to the country’s Finance Ministry.
Ireland issued the notes to the banks to avoid having to raise more 30 billion euros straight away for the banks last year. The banks used the notes as collateral to borrow funds from the Irish central bank.
If “for illustrative purposes” Ireland borrowed to meet the annual repayments, it would cost “just under” 180 million euros per annum in interest costs for each 3.1 billion euros borrowed, based on original 5.8 percent rate of Ireland’s bailout program, the ministry said in reply to questions.
“In light of the recently agreed reduction in interest rates on funding available under the joint EU/IMF Programme for Financial Support, however, the estimated interest cost on such borrowing reduces to 115 million euros per annum,” it said.
Finance Minister Michael Noonan wants to restructure the promissory notes to lower Ireland’s debt burden.
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