Following up on last week’s story about Anglo suspending interest payments on certain bonds, the Sunday Tribune had a nice article by Emmet Oliver that sheds some light on the issues surrounding this decision. Also in the Tribune, my old friend Jon Ihle reported the feel-good news story of the week about a certain bond investor who’s going to lose out as a result of this decision.
6 replies on “Tribune on Anglo Bonds”
We aim to please, Karl. Thanks for the plugs.
Nice to see our favourite ex-Chairman finally start to share our pain.
As regards the timidity of minister of finance in the face of bond markets, it ranks with the madness of crowds and other illusions.
Anyway, #’+$ all done, an awful lot more left to be done in the run down of Anglo.
Why oh why did Lenihan not simply follow FG advice from Richard Bruton last December and just announce he was going to wind-up Anglo Irish in an orderly fashion over 7-10 years.
How many billions would he have saved us?
We know who the primary dealers are for Irish sovereign bonds.
Does anyone have information or a link profiling the investors and the amounts they purchased at each auction.
Once we know the amounts the banks purchased for repo with the ECB then we can get a more realistic picture of the bid to cover ratio which ,in my opinion is artificially inflated by the banks participation.
I think winding down Anglo over 7-10 years (or less) effectively is the government’s policy. The loans will be shifted to NAMA and the funds received will be used to gradually pay off liabilities, at which point there won’t be much of a bank left and it can be closed or merged with something else. The claims about it being a going concern etc. are necessary if they are to provide assistance the bank under EU State Aid rules. Also, continuing to run it as a bank provides access to ECB lending. So I think people should perhaps be a bit more understanding about why they make the going concern statements.
Others have argued for a more immediate wind up but remember that almost all debts are guaranteed by the State up to September 2010, so there’d be no money saved there, and perhaps a lot lost if the assets are sold in a fire sale (This point is subject to the caveat of Andrew McDowell’s observation that, technically, the Board of Anglo could ask to withdraw from the scheme.)
So (as I’ve written here before) I don’t think the wind-up versus going concern debate gets at the important issue. Where Bruton has made a good point is in relation to the subordinated bondholders—his point that the government could have gotten into discussions with them rather than immediately announce a 4bn recap is a good one. Still, there’s plenty more losses to go around before this horror show is over and thus still time to see more bondholders take a hit.
it was reported that Dr. Somers queried the bank purchases and the resultant effect on the market. It looks like the banks are purchasing massive amounts of long dated bonds. Last tuesday 880billion of one bond dealt on the ISE
Sorry, figure was 880 million