Investors brace for Irish bank bond swaps

first_imgFriday 26 November 2010 9:29 am Show Comments ▼ alison.lock whatsapp Share by Taboolaby TaboolaSponsored LinksSponsored LinksPromoted LinksPromoted LinksYou May LikeMisterStoryWoman Files For Divorce After Seeing This Photo – Can You See Why?MisterStoryTotal PastThe Ingenious Reason There Are No Mosquitoes At Disney WorldTotal PastMoneyPailShe Was The Dream Girl In The 90s, This Is Her NowMoneyPailSerendipity TimesInside Coco Chanel’s Eerily Abandoned Mansion Frozen In TimeSerendipity TimesZen HeraldNASA’s Voyager 2 Has Entered Deep Space – And It Brought Scientists To Their KneesZen Heraldmoneycougar.comThis Proves The Osmonds Weren’t So Innocentmoneycougar.comAlphaCute30 Rules That All “Hells Angels” Have To FollowAlphaCuteTaonga: The Island FarmThe Most Relaxing Farm Game of 2021. No InstallTaonga: The Island FarmReporter CenterBrenda Lee: What Is She Doing Now At 76 Years of Age?Reporter Center Investors brace for Irish bank bond swaps center_img whatsapp EXPECTATIONS grew today that bondholders in Irish banks may be offered the chance to swap billions of euros of debt for new bonds, sharing the pain as they realise a loss – but avoiding a potentially worse outcome.Such tenders have been used successfully by Irish and other European banks during the financial crisis. to allow institutions to buy back bonds at a premium to their market price but at a discount to nominal value.The deal saves the banks’ money but forces bond investors to take a so-called “haircut”.Standard & Poor’s on Wednesday cut Irish banks long-term credit ratings, saying “the stand-alone creditworthiness of the four domestically owned Irish banks has weakened”.And expectations increased that senior bondholders in Bank of Ireland, Allied Irish Banks and nationalised Anglo Irish Bank would have to bear some of the distress after The Irish Times said the IMF and European Union have been examining ways of spreading the bailout costs.Investor nervousness grew after the report, with prices of Irish and European bank bonds falling sharply. There were no bids for Allied Irish or Bank of Ireland senior debt, with liquidity in the market drying up.A tender would be among the least painful options for Irish bank bondholders. Another scheme being considered involves swapping bank debt into equity. Investors could also be given the choice of injecting fresh capital or face a cut in their investment, The Irish Times said.Whether senior bondholders are forced to take a hit is a hot topic after several European politicians said they should share the cost of the bailout.“Clearly things are coming to a head in Europe and there’s a debate, particularly in regard to the Irish banks, that bondholders may need to be subject to burden sharing,” said Mark Dowding, senior portfolio manager at Bluebay Asset Management in London.“In the first instance it may be offered as a debt swap. But if there’s not sufficient take up there may be more of an enforced effort,” Dowding said.However, such a dramatic move could further undermine confidence in banks in Portugal and Spain, by showing all investors are vulnerable. And it could make it tougher for Irish banks to fill a future funding gap estimated at about €160bn (£135bn).German Chancellor Angela Merkel has repeatedly said bondholders should share the pain when a country hits trouble, but only for bonds issued from as early as 2011.An €85bn rescue package is expected to be unveiled, possibly over the weekend, to cover Ireland’s funding costs and the cost of “overcapitalising” the banks.Ireland’s government has consistently said it will honour its obligations to senior bank bondholders, despite forcing a haircut on holders of subordinated debt in Anglo Irish and Irish Nationwide.But the main opposition party Fine Gael, which will likely lead a new government next year, has said all bondholders should share the burden of bailing out the banks. Bank of Ireland, which has boosted capital by €1.7bn from bond offers in the last two years, had about €31bn of senior debt and asset-backed securities at the end of June.AIB had €20bn of senior debt and Anglo has about €6.5bn of senior debt after maturities in September. More From Our Partners Supermodel Anne Vyalitsyna claims income drop, pushes for child supportnypost.comRussell Wilson, AOC among many voicing support for Naomi Osakacbsnews.comA ProPublica investigation has caused outrage in the U.S. this weekvaluewalk.comPolice Capture Elusive Tiger Poacher After 20 Years of Pursuing the Huntergoodnewsnetwork.orgSidney Crosby, Alex Ovechkin are graying and frayingnypost.comNative American Tribe Gets Back Sacred Island Taken 160 Years Agogoodnewsnetwork.orgFlorida woman allegedly crashes children’s birthday party, rapes teennypost.comBrave 7-Year-old Boy Swims an Hour to Rescue His Dad and Little Sistergoodnewsnetwork.orgAstounding Fossil Discovery in California After Man Looks Closelygoodnewsnetwork.orgI blew off Adam Sandler 22 years ago — and it’s my biggest regretnypost.comMark Eaton, former NBA All-Star, dead at 64nypost.comKamala Harris keeps list of reporters who don’t ‘understand’ her: reportnypost.comKiller drone ‘hunted down a human target’ without being told tonypost.com980-foot skyscraper sways in China, prompting panic and evacuationsnypost.comFeds seized 18 devices from Rudy Giuliani and his employees in April raidnypost.comConnecticut man dies after crashing Harley into live bearnypost.comInside Ashton Kutcher and Mila Kunis’ not-so-average farmhouse estatenypost.comBiden received funds from top Russia lobbyist before Nord Stream 2 giveawaynypost.com Tags: NULLlast_img read more