COLLAPSED Anglo Irish Bank will repay another €200m of so-called 'senior unsecured bonds' tomorrow, further reducing the gain the State can make it if embarks on burden sharing with bank bondholders.
Tomorrow's repayment, which the bank is legally compelled to make, will see investors who bought the bonds back in December make gains of as much as 13pc.
The Government has already ruled out burden sharing with senior bondholders in AIB, EBS, Irish Life & Permanent and Bank of Ireland but has left the door open for Anglo and Irish Nationwide in the future.
Finance Minister Michael Noonan has said losses may be inflicted on senior bondholders in Anglo and Nationwide if the two institutions need more capital, and if the European authorities and the IMF agree.
Since the latest capital assessment of Anglo and Nationwide has not yet been published, tomorrow's repayment will go ahead as usual, sources said last night.
Even if Anglo and Nationwide did need more capital, repayments over the next couple of months would probably have to be made since it could take months to get agreement on burden sharing from Europe and the IMF. The Anglo bonds were yesterday trading at face value, implying that investors were fully confident the bonds would be repaid.
In December, after Ireland succumbed to an EU/IMF bailout, the bonds were changing hands for just 87pc of their face value. From tomorrow, Anglo will have less than €3bn in senior unsecured bonds left; while Nationwide's pool of senior unsecured debt stands at just over €630m, according to data from Bloomberg.
The next major payment for Anglo is a $1bn (€708m) bond that falls due in November, while Nationwide has a €538m bond that matures in late June 2012.
AIB is also due to repay some 2bn yen (about €17m) of senior unsecured debt tomorrow. (Additional reporting by Bloomberg).