Nationwide makes €172m coercive offer to low-rank bondholders
IRISH Nationwide building society yesterday launched a coercive offer to buy back £146m (€172m) of its subordinate debt at a discount of about 80pc.
The building society, which last week sold off its €3.6bn deposit book to Irish Life & Permanent, has given the sterling bondholders until March 8 to accept the offer.
Those who don't sign on the dotted line will be offered 0.001pc of the face value of their bonds on March 18. This has led market sources to expect a high take-up.
The debt under offer represents Nationwide's entire outstanding amount of "subordinate" bonds, the low-ranking bonds that failing banks are legally allowed to force losses on.
"It looks like a fair deal in terms of price, so an ok deal in that regard," said one source, referencing the fact that the Nationwide offer is at a slight premium to market prices.
"But it's not a positive for bank credit overall that we've witnessed another coercive 'take it or leave it' style offering."
When Anglo made a similar tender for some of its subordinate bonds last October, some 90pc of investors took up the offer.
Nationwide also has a €632m pile of senior bonds that are due to mature in June 2012. The EU authorities have so far insisted that Irish banks will not be allowed to force senior bondholders to accept losses.