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Anglo's $1bn debt surges to 93pc of face value

A billion-dollar slice of debt due to be repaid by Anglo Irish Bank in November was trading at 93pc of face value last night, up from just 50 cent in the euro before the general election.

The bonds have seen a bounce of up to 5pc since Friday, when they traded at 88 cent to 89 cent in the euro, according to Ryan McGrath, a bond trader at Dolmen Securities in Dublin.

Prices rose after Finance Minister Michael Noonan accepted at the weekend that he had little or no chance of forcing losses on holders of the bonds, even though they were not covered by an explicit government guarantee.

Traders also saw unusually strong demand for Anglo Irish Bank bonds due to be repaid in 2012 from an account in London.

Prices for the Anglo bonds have been volatile since the general election as investors speculated on who would win out in a face off between Mr Noonan and European Central Bank (ECB) president Jean-Claude Trichet over the issue.


Now investors are betting that taxpayer-owned Anglo Irish Bank will repay the $1bn of debt in full and on time.

Yesterday Taoiseach Enda Kenny said Mr Noonan was "reflecting" on the issue after meeting Mr Trichet last week.

'Burden sharing' -- or ensuring that the private sector helps foot the bill for banking losses -- remains the Government's favoured policy and was an issue in the run up to the general election.

However, Mr Noonan conceded at the weekend that his hope of inflicting losses on bondholders holding unguaranteed debt in the banks was doomed without support from the ECB.

Irish Independent