Friday 20 October 2017

'Speculators will make a killing' from gamble on failed bank

Michael Brennan Deputy Political Editor

SINN Fein stood over its call to "burn the bondholders" in Anglo Irish Bank -- even if they include pension funds and insurance companies.

Today, the bank will pay back a €750m instalment in the overall €3.7bn bill to Anglo bondholders not covered by the state banking guarantee.

The identities of the senior bondholders have never been revealed -- but senior bank bonds are often bought by pension funds and insurance companies.

Before the crash, these funds often saw bank bonds as a reliable way of getting interest payments and being repaid on an agreed date.

Sinn Fein public expenditure spokeswoman Mary Lou McDonald said her party believed the money should not be paid over -- even if the bondholders included pension funds and insurance companies.

"There can be no excuse for the Government handing over €750m tomorrow and in January a further €1.2bn to unguaranteed (Anglo) bondholders," she said.

Ms McDonald said it would be helpful if the identities of such bondholders were released -- but said it did not take away from the fact that the debt owed to them by Anglo was unsustainable.

Fianna Fail finance spokesman Michael McGrath said he believed that pension funds and insurance companies would have off-loaded their unguaranteed Anglo senior bonds in favour of less risky investments.

He pointed that such senior bonds had been trading in the markets at less than half their original value until recently.

"It's clear now that some of the speculative investors are going to make a killing on the bonds because they made a gamble that the bonds would be repaid in full," he said.

Finance Minister Michael Noonan has said that he brought up the issue of "burden sharing" -- cutting the payments to Anglo bondholders -- with former European Central Bank president Jean-Claude Trichet at a meeting in Warsaw last September.

But his request was rejected by Mr Trichet, who warned that it "was not in the interests of Ireland or the euro area".

Irish Independent

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