Friday 23 February 2018

Invesco fund regrets 'poor' Anglo bond investment

Emmet Oliver

A FUND managed by one of the world's largest money managers, Invesco, is a bondholder in Anglo Irish Bank, an investment it has described as a "poor decision''.

The Invesco-linked fund bought into a floating rate Anglo bond due to mature in 2016 but has realised a loss on its investment, made through its perpetual recovery trust fund, which it manages.

Invesco is an asset manager with offices all over the world and assets under management of over $350bn. It has a large range of sub-funds and investment trusts which it manages, including the perpetual recovery trust.

During 2010 the trust bought into an Anglo bond, although the investment was small in terms of its overall portfolio. "The latter purchase (Anglo) has already proved to be a poor decision following the rapid escalation of the pressure on Ireland as part of the eurozone," states its annual report.

The asset manager said the loss was caused by the "inclination of investors to settle for anything they can get rather than to enter a stand-off with the government''.

"We shall realise a loss on this thankfully small investment, but this may be partially offset by a gain on the other purchase which is currently showing a profit," it has told its investors in a 2010 annual report.

The identity of bondholders in Anglo and other banks is only occasionally disclosed as there is no market requirement on those holding the securities to disclose their positions.

Most of the Anglo bondholders over recent years are asset managers and pension funds, although hedge funds have bought into the bonds in recent months.

One New York hedge fund is taking legal action against Anglo in a New York court, claiming bondholders' rights have been subverted by recent NAMA loan transfers.

Anglo has been one of the most aggressive European banks in forcing coercive losses on junior bondholders in the last six months. Senior bondholders have to date remained untouched by so-called coercive burden sharing.

In October, bondholders, particularly in the UK, were shocked when the bank offered holders of some of its outstanding subordinated debt just 20 cents on the euro, with other groups offered just 5 cent on the euro.

Yesterday, Davy Stockbrokers said the catchcry in Ireland to "burn"' bondholders was likely to delay the re-entry of Irish banks into the credit markets.

Irish Independent

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