tag:blogger.com,1999:blog-8817171247555815363.post7490216101207552756..comments2024-03-26T05:57:44.937+00:00Comments on True Economics: 16/12/2012: Stop the nonsense on 'non-payment' of Promo Notes 2012TrueEconomicshttp://www.blogger.com/profile/07350536454228478974noreply@blogger.comBlogger3125tag:blogger.com,1999:blog-8817171247555815363.post-73963375657016990662012-12-17T23:15:30.693+00:002012-12-17T23:15:30.693+00:00The coupon cannot be considered a "cost"...The coupon cannot be considered a "cost" (Anglo will end up costing whatever it ends up costing)<br /><br />Jesus Wept.JeromeKnoreply@blogger.comtag:blogger.com,1999:blog-8817171247555815363.post-68731355848852963202012-12-17T15:04:59.420+00:002012-12-17T15:04:59.420+00:00Two things:
1. the bond issued was actually a tap...Two things:<br /><br />1. the bond issued was actually a tap of the 5.4% 2025's, just random coincidence that the 15s (which was created via a swap from 13s and 14s in January) has a really similar amount issued. Coupon on that bond is 5.4%, but it was priced at market price which existed at the time, which i think gave a yield of ~6.7% or something. So actually 3.53bn was issued to make good a 3.06bn bill.<br /><br /><br />2. Coupon on this is being paid to IBRC, which we 100% own and support. Therefore the coupon cannot be considered a "cost" (Anglo will end up costing whatever it ends up costing, this transaction will not change that). The true "cost" of this transaction is the combination of the ECB refi rate (0.75%) and the BoI credit margin that was charged (130bps or something i believe), and only 85% of that credit margin(as we own 15% of BoI). So real "cost" is 2% x 3.06bn, or €61mn, minus our 15% BOI ownership "profits", so around €55mn total. However, this should be compared against how the "profits" from the ELA are distributed (ie does CBoI get all of it or some of it?), and the difference between that and the €55mn is the ultimate true cost. The alternative was to use either existing cash holdings or raise long term debt in the markets, both of which it could be fairly argued would end up being more expensive than this transaction.Owen Callannoreply@blogger.comtag:blogger.com,1999:blog-8817171247555815363.post-40270298819357279232012-12-17T10:11:16.777+00:002012-12-17T10:11:16.777+00:00Re "Thus, the cost to the taxpayers of Minist...Re "Thus, the cost to the taxpayers of Minister Noonan's 'non-payment' was €163.35 million annualized."<br /><br />If that is correct then Minister Noonan should be sacked - that is an enormous sum of money to spend on optics. JeromeKnoreply@blogger.com