Anglo in bid to buy back €170m of private 'covered bonds'
Published 09/12/2010 | 05:00
Anglo Irish Bank has launched an offer to "buy back" around €170m of "covered bonds", a type of debt that in this case is backed by a pool of UK home loans.
The €170m of bonds are held by private investors but are part of a larger pool of €3.5bn covered bonds that are mainly held by the European Central Bank. Anglo is offering face value for the bonds -- issued in euro and Japanese Yen.
A source familiar with the details said the recent ratings downgrade of Anglo made it impossible for borrowers to hold this type of debt. Buying the bonds back at face value will mean no financial benefit for Anglo.
Meanwhile, an auction will be held in London this morning to decide how much compensation insurance providers will pay to Anglo's subordinated bondholders for the loss they suffered as a result of a buyback of those bonds at just 20pc of face value in November.
Anglo is reported to have US$346m of net CDS outstanding on its debt. The major banks that provided the CDS insurance are: Bank of America, Barclays, BNP Paribas, Citigroup, Credit Suisse, Deutsche Bank, Goldman Sachs, HSBC, JPMorgan, Morgan Stanley, Nomura, Societe Generale, RBS, UBS.