Not All PIIGS Are Created Equal: Irish Bail Out Package To Come With 6.7% Interest Tag, 1.5% Higher Than Greece

Tyler Durden's picture

RTE reports that the IMF/EU Irish rescue package will come with a whopping 6.7% rate for nine year money. Per the RTE article, it is unclear if that will be an APR or some multi-year blended effective annual yield: "The Government's four year plan assumes that by 2014, interest payments
will have increased from €2.5 billion to €8.4 billion a year - around
one fifth of all tax revenue." Regardles of how it is calculated, newspaper tomorrow will be blasting the 6.7% number, which is 150 bps wide of what Greece is paying on backstopped paper, and will only create further resentment at the fact that not only is Europe split into a core and PIIGS, but that it is now apparent that not all PIIGS are treated as equals. How Irish citizens will react once they find out that the EU believes they are less creditworthy than even the Greeks, only the IRA can predict.

From RTE:

It is understood that the Taoiseach, the Minister for Finance, the heads of the Central Bank, the NTMA and senior officials met in Government Buildings for several hours this evening to discuss the details of negotiations with the EU and the IMF.

It is believed that contacts will resume tomorrow.

Fine Gael Finance Spokesman Michael Noonan said the suggestion of a 6.7% rate was very disturbing.

He said the Government must not abandon the national interest and settle on unaffordable terms in its negotiations.

Earlier, leaders of the Irish Congress of Trade Unions finished discussions on the country's debt crisis with the EU/IMF delegation in Dublin.

And also in the RTE we read of a guaranteed harbinger of what is to come for the ruling party, a Sinn Fein representative won a by-election in Donegal: the same opposition party which has branded the current administration in Ireland as traitors.

Pearse Doherty has been elected in the Donegal South West by-election to fill the Dáil seat vacated by MEP Pat The Cope Gallagher.

He was elected after the fourth count without reaching the quota. Fine Gael's Brian O'Neill came second with Fianna Fáil's Brian Ó'Domhall in third place. The total valid poll was 34,424 and the quota is 17,213.

Mr Doherty got the highest number of first preference votes with 13,719 in the first count.

He described the election as, 'the by-election the Government never wanted to happen' adding that 'the result tells us why'.

Speaking after the result was announced, Mr Doherty said the vote was a rejection of the interference of the IMF in Irish affairs and said he would be voting against the Budget on 7 December.

Update: Irish Times is quick to quell the public fury by reporting that while it has no clue what the interest rate will be, a "source" has said it will be lower than the 6.7%. In other words, just like the Greek bailout package started at $500 billion early in the day on that fateful Sunday in May only to progress to $1 trillion based on the futures reaction, so the IMF now will likely determine just what the final interest rate on the rescue loan will be based on the degree of public mauling of various elected officials over the weekend. Mere cuts and lacerations should be sufficient for 6%, broken bones: 5.75%, 3rd degree concussions: 5.5%, getting someone drawn and quartered may just leave Ireland to borrow on the same terms as 3 month US T-Bills.

The interest rate for a nine-year EU/IMF loan would be lower than the 6.7 per cent being quoted in some reports today, a source involved in the talks has indicated.

The source said the interest rate was still under negotiation but would not be that high.

The loan of €85 billion would come from a number of different funds, some controlled by European Union institutions, others by the IMF. It is understood that the interest rate for the IMF portion of the loan will be in the region of 4.5 per cent, while the interest charged by EU bodies will be considerably higher.

The source accepted that the average interest rate was likely to be higher than the 5.2 per cent charged to Greece when it was bailed out earlier this year. But it was pointed out that the Greek loan was for a period of only three years.

Higher rates of interest are attached to longer loans and the nine-year loan being negotiated on behalf of the State will involve a higher interest rate, as the risk of default is considered to be higher.

Officials in the EU-IMF mission to Dublin are examining how senior bondholders could be compelled to pay some of the cost of rescuing Ireland’s banks.

h/t Mark


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trav7777's picture

Greece rioted more before selling out

decon's picture

As the old joke goes, God created alcohol to keep the Irish from ruling the world.

Sudden Debt's picture


VK's picture

The Irish rub of the green sure ain't working anymore.

Lord Welligton's picture

6.7% is economic suicide.

It won't happen.

Mentaliusanything's picture

 The total tax take in Ireland in 2009 was €54.4, over €20 billion more than the Exchequer tax receipts.

Then you have to run the country, Finding an additional 15% to pay the interest is going to be Impossible with the debt they have. Think one credit card too many! This is whitewash on a termite eaten economy. 

Austerity breeds Austerity

unky's picture

The irish will pay higher interest since they wont protest as much in the streets like the greek people. So they have to pay the price for that ?!

breezer1's picture

irish will kill over money.

RobotTrader's picture

Anybody know why poor Jimmy Rogers' Yuan is collapsing?

What the hell????


Translational Lift's picture

No problem....He's got plenty of basic materials.......  :>)

DoctoRx's picture

I junked you because A) your obtrusive comment is O/T, B) this is not a yuan "collapse" in any case, C) you have no idea how Rogers is positioned tactically, D) Rogers is bearish on the PIIGS and all fiat currencies, and E) a day or two ago you made a junkable comment on the order of gold $1600 implied Dow 14K (obviously you forgot that the Dow remains in its accel downtrend channel vs Au).

Arius's picture


you think too much; and pls dont call them PIIGS - it shows disrespect for a whole group of people.  what makes you think US is not a pig (sort of) in the making?

goldsaver's picture

PIIGS is just an acronym. Now, re-arrange the letters as PIGIS or GIIPS and then is an insult.

Arius's picture

i know - but dont you think PIGS as an acronym is being used to denigrate those people and probably more to the point to make ill-profits in forex...anyway..

nice dolar!


goldsaver's picture

I guess is in the eye of the beer holder. You can take anything as a pejorative. Just don't accept it as such and it looses its power. Decades ago as a young man who spoke little English (some would posit I still speak little English), a very rude co-worker decided to spew insults my direction. When he could not get my ire up he yelled: "What do I care, you are just a spic!" Since I had no clue what the word meant, I was not offended. I replied "Wrong nationality, I don't even know what country that is!". The room exploded in laughter as everyone assumed I was just mocking him. I actually had to ask a friend afterwards what it meant.

spdrdr's picture

Hmmm, someone (much more clever than I) recently postulated that you only have to add Hungary and Turkey to the PIIGS, and you end up with "PIGSHIT" as an acronym...... 

New_Meat's picture

Arius-thanks-PIIGS is so perjorative ;-) - Ned

putbuyer's picture

Rogers is always on the money. Wait and you will be toasted.

Sean7k's picture


The blue line does not look like a collapse. There may be movement, but what currency hasn't been doing this? 

Mr Rodgers is living in Singapore. Have you been paying attention to the Singapore dollar? 

You might want to create some buzz before you take on Mr. Rodgers.

RockyRacoon's picture

You're off topic.  Don't you have an opinion or a ramped-up chart for something on topic?

putbuyer's picture

I like PIS. The remaining idiots. The PIS countries. My family owns a lot of P. The thing is that historically Portuguese tend to be Intraverts. Will they wake up now? not sure

doolittlegeorge's picture

You're not from Rhode Island are you?

Slash's picture

sounds like central banks doing what they're designed to do. Loan sovereigns into unbearable debt and capture the fruits (tax revenue) of the country's people.....


Rothschild would be proud of his baby!

Belrev's picture

They is proud of his baby. I bet you that he are sitting in their mansions all over Europe just about now and rubbing his proverbial jewish hands in glee of how he is totally having everybody.

AUD's picture

"Loan sovereigns into unbearable debt"?

Central banks are just a branch of the government. Without a government enforcing legal tender the credit of said government would be worthless.

The Rothschilds are simply exploiting the avarice of government not clandestinely controlling it.

Slash's picture

how one earth did you get the idea that central banks are part of the government? The federal reserve is not federal and certainly has no "reserves". It's completely owned by the banking system.......aka the biggest banks.....aka wall street.


you're right in the sense that they just profit from the stupid avarice of politicians and the people they "serve". Think of us as addicted junkies and the fed res as our dealer.

AUD's picture

How on earth did you get the idea it wasn't? The Federal Reserve was created by the US government. It is the US government that enforces legal tender.

The Reserve Bank here in Australia is quote (on its website): "wholly owned by the Australian government".

The Bank of England has been doing the British governments bidding for centuries. No private bank could force you to accept its bad credit as payment. Wake up man.

Sean7k's picture

Actually, the FED was created by Bankers in the service of the Rothchilds and Rockefellers. They gained their charter through manipulation and a late night vote. The counterfeited an amendment to tax the people. 

They even found a way for us to fund their share of the start up! Then they slowly bought the government through the loaning of money. 

The FED was created three times here. It is based on the same model that was used around the world- The Bank of England. As for the Brits- it's the other way around. Go back to the Corn Laws. 

No private bank could force you to accept it's bad credit as payment? I may be wrong, but last time I was in Australia- you were using fiat currency. This is the definition of bad credit. Did you think you didn't have a national debt? 

There is a reason they're called notes...

AUD's picture

No, the Fed was created by the government.  You said it yourself: "They gained their charter through manipulation and a late night vote". Who was it that voted, the Rothchilds? No, it was the congress, or whatever you call it in the US. The bankers may 'run' the scam but its the government that created & maintains it.

And as I already stated the RBA is "wholly owned by the government". Yes we use fiat money here but it's not issued by the local credit union for fucks sake.

The Bank of England was originally given a charter by guess who? Yes, the British government. Without its government given charter its credit would be worthless overnight.

Really, wake up. No private company could force you to accept its bad credit.

merehuman's picture

AUD, i think you are mistaken. Be it fed, banks or government, its a very few jews that actually are in control. Israel must be very proud.

AUD's picture

By blaming jews you are only making your predicament worse by letting the real culprits continue with their nefarious activities.

Undoubtedly there are jews in high places but it is the government that is the source of the problem. Central banks are government institutions since they can only operate under the aegis of government, no private institution can have that power over everyone else.

And anyway, last I heard the citizens of Israel were also being crushed under the irredeemable debt of the shekel, issued by the central bank of Israel, same as the rest of us.

Sean7k's picture

Common mistake. It is not the Jews that are the problem- it is the Zionists. The Zionists will toss Jews out to be cannon fodder. The Zionists are the bankers.

Sean7k's picture

For the government to create it, it would have required the government to conceptualize it. It didn't. You need to wake up. What is a vote if it is the end product of graft? 

Our fiat currency is not issued by a credit union either. As for the BOE, I haven't seen anyone able to dismiss the charter- why is that? Don't be so naive. 

Your government and mine and all the others are mere functionaries that work at the behest of the banks. The votes are manipulated by legislators that are bought and paid for. The occasional maverick? Certainly, but that is because it lends credence to the system. Your government is bought and paid for. 

You ignore the police power of the state at your own peril. How is that mineral tax going there? What is a subsidy? A private company forcing you to accept their debt. 

AUD's picture

"What is a subsidy? A private company forcing you to accept their debt."

You're so full of shit. A subsidy is the government forcing you to accept the debt of a private company.

Your revolution will fail moron.

Sean7k's picture

And you are not responsible for the debts of your government? 

Go back to your banker buddies. 

Moron? Nice, you got beat by a moron, what does that make you?

AUD's picture

"And you are not responsible for the debts of your government?"

So now it is the government forcing me to accept its bad credit?

And I got beat by you?

goldsaver's picture

Partially correct. The Federal Reserve Act of 1913, chartered the Federal Reserve Bank (a Private bank formed for this purpose) as the sole issuer of legal tender notes. Before this, every bank could issue notes. The bank stayed in business only as long as the people trusted the bank. As soon as customers quit trusting the banks, they demanded their gold be returned and the bankers ran (bank run).

The Federal Reserve Act made it illegal for banks to print their own notes and made them all subservient to the Federal Reserve Bank owners (J.P. Morgan, John Chase, Rockefeller)

In practical application, the Federal Government is the biggest bank customer and, thru the IRS is its enforcement arm by prosecuting competition (counterfeiting) and collecting profits (bankruptcy courts, and taxing authority)

tewkatz's picture

Yes, it really is unbelievable...they are economically controlling whole countries with printed-on-demand fiat paper...unvelievable...

As a spy movie it would fail...who would ever believe James Bond fighting a bad-guy who buys up whole countries (and soon US States) with monopoly money and makes them pay him additional tax-revenue for eternity just for his 'effort' of printing the monopoly money.

Too unbelievable to work...easier to buy:  a Mariana island with a beautiful only-bikini-owning woman, a midget and an old dude with a huge frickin' lay-zore.  

Translational Lift's picture

Let's just hope that the potatoes hold up..............

TheGreatPonzi's picture

6.7% is indeed economic suicide. It was precisely when the Bonds rate passed over 6% that the spiral began.

Lord Welligton's picture


However. The "rescue" package ought to be "reasonable".

This, if true, will result in a violent reaction.

Perhaps that is what Germany wants.

But German and French banks can kiss €200bn goodbye.

goldsaver's picture

Where the hell is the IRA on this? Don't they consider this as a direct attack by Britons against Ireland?

Lord Welligton's picture

You might want to catch up on recent Irish history.

The Belfast Agreement and the St. Andrew's Agreement would be a good start.


DoChenRollingBearing's picture

I have to call Bullshit here re the IRA.

When the girl who became my wife was young, she lived in London with an English family.  One day she heard a big bomb explode across the park in front of the house where she stayed.  It was an IRA bomb trying to kill a Member of Parliament, who incidentally had (Irish-American) JFK's daughter Caroline staying there.  Yeah that would have been real smart: killing a Kennedy.  My wife still has the newspaper clipping from the attempted murder by bomb.

Oh yeah, the Marxist IRA bastards also perfected the "Second Blast" idea...  Set off a bomb, and then 30 - 45 minutes later, set off the second one (after the emergency responders show to care for the casualties).

goldsaver's picture

Not lauding the IRA here DoChen, my single serving friend. Sometimes evil needs to be faced by equal evil. Plus I suspect that the banksters fear nothing, so would love to give them something to fear.

DoChenRollingBearing's picture

I hear you re the Banksters. Good time to make them sweat.

I had more than a single serving of turkey yesterday!

Arkadaba's picture

You may be correct - might be what Germany wants. It makes sense.

A Man without Qualities's picture

I think we should connect the dots on this one - 6.7% does make sense if it assumes senior bondholders of bank debts take a haircut.  The Europeans know that Ireland cannot pay this rate if they assume a full bailout of the banking system, but if there is a haircut, it will be a very different proposition.  

I think this is the surprise outcome and the US and UK will hate it, but the Europeans know that democracy requires a more equitable distribution of the costs.

Also, higher rates at the long end will make the solvency of the state pension fund better.

mudduck's picture

It doesn't matter if it's 10%, as it will never be repaid. As in the case of Greece, this money should be classified as a donation by the givers and income by the recievers. At least now when it comes time to 'loan/donate' money to the next weak link of Portugal or Spain, the Greeks and Irish will be able to hand over their IMF/EU share.