Saturday 18 November 2017

Over €1bn of Anglo bonds to be repaid

IRBC must pay big reward to senior investors who 'bought on the cheap' two years ago

Donal O'Donovan

Donal O'Donovan

The former Anglo Irish Bank will repay over €1bn of unguaranteed bonds over the coming week, reigniting the "burn the bondholder" controversy.

Irish Bank Resolution Corporation (IRBC), the new name for Anglo and Irish Nationwide Building Society, will repay more than €1.1bn of debt next week as the controversial policy of paying all unsecured senior liabilities continues.

Four separate bonds fall due over the week, including a €598m bond due on June 26 and £400m (€500m) on June 28. The bonds are held mainly by foreign investors, many of whom bought the debt at steep discounts over the past two years when the original lenders feared the collapsed state-owned bank might renege on the IOUs.

Instead those investors who bought the debt will reap big rewards when the debt is repaid in full and on time.

That's sure to reignite the controversy over whether or not the State should have "burned bondholders" by forcing losses on lenders to failed banks. Yesterday IBRC said it must continue to repay the debt.

"The bank is contractually obliged to repay senior securities on their maturity dates."

Finance Minister Michael Noonan said this week that the ECB has blocked any attempts by Ireland to impose losses on senior bank bondholders. It rejected Ireland's bid to burn senior bondholders, concerned that such a move would undermine confidence in the banking system.

Last night Spanish policy makers were considering forcing losses on junior bond holders in banks in that country.

Irish Independent

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