b4mbi Posted November 22, 2016 Share Posted November 22, 2016 The 5 diesel generators if properly maintained should last at least another 20 years, but don't know about the combined cycle generator.. Link to comment Share on other sites More sharing options...
GD4ELI Posted November 22, 2016 Share Posted November 22, 2016 but don't know about the combined cycle generator.. These things are quite cheap on eBay. Link to comment Share on other sites More sharing options...
notwell Posted November 22, 2016 Share Posted November 22, 2016 How much is owed to non government sources? £260 million is repayable when Isle of Man Government water and electricity bonds mature in 2030 and 2034 respectively. In addition in 2002 MEA contracted to bring gas here in a spur of the UK-Irish natural gas inter-connector and MUA has to pay construction costs until 2023. "The finance liability represents the present value of expected future capacity payments discounted at an interest rate of 5.5% per annum", according to the annual report. Nearly all the balance of MUA debt is due to government as it is now financed from government's Consolidated Loans Fund. Who invested in the bonds? This I could never establish and have speculated in the past that it could be our own NI fund. £33m in bond repayment fund (£3m was added in 14/15) £227m net left on the bonds. Maturing in 2030 (£75m) and 2034 (£185m). So 15 years at £3m per year (including the existing fund) can just about repay the £75m. Then only 4 years to find £185m.....good luck!! Practically of course, these bonds will have to be refinanced, and maybe they'll get a better rate than 5.375% on the £185m A 15 year UK gilt is at about 1.5%. Perhaps 2% out to 20 years. Link to comment Share on other sites More sharing options...
hagar the horrible Posted November 22, 2016 Share Posted November 22, 2016 but don't know about the combined cycle generator.. These things are quite cheap on eBay. Retirement job for Cav? Link to comment Share on other sites More sharing options...
b4mbi Posted November 23, 2016 Share Posted November 23, 2016 Practically of course, these bonds will have to be refinanced, and maybe they'll get a better rate than 5.375% on the £185m A 15 year UK gilt is at about 1.5%. Perhaps 2% out to 20 years. Does beg the question, can we not repay/refinance these bonds now??? last market price here (but massively illiquid stock),135.63 ---> c. £250m to repay now. Issue new bonds at 2%, repay old ones. £185m x 5.375% = £9.94m interest p.a. £250m x 2% = £5.0m interest p.a. c. £5m saving per annum for next 18 year to maturity = £90m. £250m - £185m = £65m Very simplistic (ignoring inflation/time val money) but definitely worth looking into... as would be £35m better off in 2034... companies in Europe issuing negative yield bonds now, because some pension funds are restricted in the type of investment they can make, so would think you would definitely get full subscription for £250m @ 2%.. Link to comment Share on other sites More sharing options...
notwell Posted November 23, 2016 Share Posted November 23, 2016 The issue here comes from how and where it is financed from. It isn't clear IMO (not sure if that is on purpose either). The MUA (which is government owned) is paying interest to government on a Bond? So, the government (or taxpayer) should be seeing the benefit of the interest currently being paid (or rolled up as I think there are two loans and both is going on?). So, you could argue that refinancing it won't save any money. More that it would relocate some debt from government to a 3rd party. This will be cheaper to service for MUA but on the other side government don't get the current interest payment benefit. Also, if the original loan came from government cash has the deal actually been the subject of a Swap because if it wasn't then there isn't anything hedged to unwind. From an MUA customer perspective quite clearly the argument to refinance it would be very straightforward. It would reduce MUA costs, help reduce debt and potentially see savings passed on to customers. Link to comment Share on other sites More sharing options...
woolley Posted November 23, 2016 Share Posted November 23, 2016 It should be far more transparent. (But it won't be). Link to comment Share on other sites More sharing options...
b4mbi Posted November 23, 2016 Share Posted November 23, 2016 Notwell, I refer to my previous post which is essentially the nub of your post, "Who owns the bonds?" If they are externally owned (i.e. not by our own Government) then it makes sense to refinance, as the overall position for MUA improves as you suggest. Per the wording in the accounts the bonds are issued by MUA in the name of the IOM Treasury, but shows the £260m as an amount due to Government. MUA also had another c£270m on the consolidated loan fund (at 31/03/15), which is a direct loan between IOM Treasury and MUA and was stated that in 15/16 the IOM Treasury would start to charge interest on that loan to MUA at 1%, previously it having been at 0%. Perhaps Chris Thomas could answer that? Who owns the £185m IOM Treasury 5.375% 08/2034 bonds? and the £75m IOM Treasury 5.625% 2030 bonds too for that matter?? Link to comment Share on other sites More sharing options...
notwell Posted November 23, 2016 Share Posted November 23, 2016 What is also interesting here is how these are viewing the the big scheme of things in terms of reserves. I suppose the reserves should include all government entity debt as well as money owed to government. Link to comment Share on other sites More sharing options...
goddess Posted November 26, 2016 Share Posted November 26, 2016 What is also interesting here is how these are viewing the the big scheme of things in terms of reserves. I suppose the reserves should include all government entity debt as well as money owed to government. Can you explain that so folks outside accountancy or financial services can understand ?Im sure it would be gratefully received (By me anyhow ) Link to comment Share on other sites More sharing options...
Chinahand Posted November 26, 2016 Share Posted November 26, 2016 @b4mbi I used to bang on about calling in the bond and refinancing it at the prevailing lower rates, but when Teare was asked about it in Tynwald he said it hadn't the necessary legal clauses to be called so we are left paying it to the 2030s. Not making it callable would have made it cheaper to issue and made the rate slightly lower, but the history of the bond and the way rates have dropped makes it the wrong decision in hindsight but heck that's no help. Link to comment Share on other sites More sharing options...
notwell Posted November 26, 2016 Share Posted November 26, 2016 What is also interesting here is how these are viewing the the big scheme of things in terms of reserves. I suppose the reserves should include all government entity debt as well as money owed to government.Can you explain that so folks outside accountancy or financial services can understand ?Im sure it would be gratefully received (By me anyhow ) I'm not sure there is much to explain. I'm simply wondering if when figures are presented about the islands overall financial position how are they presenting it? Clearly there is a lot of coverage of the MUA and it's debt. Given that is it actually owed to another Government department you can't really have it as a liability only. Link to comment Share on other sites More sharing options...
notwell Posted November 26, 2016 Share Posted November 26, 2016 @b4mbi I used to bang on about calling in the bond and refinancing it at the prevailing lower rates, but when Teare was asked about it in Tynwald he said it hadn't the necessary legal clauses to be called so we are left paying it to the 2030s. Not making it callable would have made it cheaper to issue and made the rate slightly lower, but the history of the bond and the way rates have dropped makes it the wrong decision in hindsight but heck that's no help. If the bond is from Government I don't see how that could be the case. If so then the people who are doing well are all of us and the people getting shafted are any MUA customer. Link to comment Share on other sites More sharing options...
Albert Tatlock Posted November 26, 2016 Share Posted November 26, 2016 My name is Bond. Low Interest Bond. Link to comment Share on other sites More sharing options...
ManxTaxPayer Posted November 26, 2016 Share Posted November 26, 2016 My name is Bond. Low Interest Bond. Link to comment Share on other sites More sharing options...
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