Business Irish

Saturday 18 November 2017

Q & A: Getting burned in the bond market

So, we can burn these bondholders, but not Anglo's?

We can burn these BOI bondholders because they bought 'subordinate' debt -- the stuff with higher interest rates and higher risks. We can't burn the Anglo bondholders that got $1bn (€750m) back in November because they bought 'safe' senior debt. The Anglo subordinate bondholders have already been fried.

And our friends in the troika are okay with this?

Even the ECB is on board -- which is lucky since Ireland wouldn't be doing it if it wasn't. The ECB is dead set against forcing losses on senior bondholders, but subordinate bondholders are seen as fair game -- when things go wrong they expect to lose out.

What does it all mean for the taxpayer?

Not as much as it would mean if it was AIB, Anglo or Irish Life & Permanent, since the taxpayer owns just 16pc of Bank of Ireland. Bottom line is BOI could raise as much as €350m if all goes according to plan. That kind of cash going into BOI could make it easier for the taxpayer to get some of its money back sooner.

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