“I see you’re on the night shift again Greg.”

It’s the Graveyard shift Pa.

Somebody has to keep them Zombie Bankers in their place.

Buried ……..

“Do the Math … Do the Monster Math…”

http://www.youtube.com/watch?v=nmKWJMENMxE

As part of this overall capital plan, and in the context of wider discussions with the State, the Bank is continuing to work with the State and the EU, including positioning the State shareholding in the Bank at a level which facilitates possible access to private capital sources. The Bank acknowledges the ongoing State support.

The Minister for Finance, Mr. Brian Lenihan T.D., welcomes the issue by Bank of Ireland to the National Pensions Reserve Fund of €250 million worth of its ordinary shares in lieu of a cash payment of this year’s coupon due on the preference shares which it received under the recapitalisation agreement. This ensures that taxpayers are remunerated in a timely fashion for their investment in the bank.

The Minister understands that the Bank of Ireland is assessing its ongoing capital needs and is actively exploring options, including accessing the private capital markets to enhance the capital position of the bank in consultation with relevant authorities. In his discussions with the bank the Minister will ensure that the taxpayer is appropriately remunerated for any investment in the bank and issues in relation to coupon payments and preference shares will be determined in the context of the Bank of Ireland restructuring plan.

“The State is taking 15.7% stake in Bank of Ireland on Monday. The shareholding is in lieu of a dividend owed to the Government by the bank.”
http://www.rte.ie/business/2010/0219/boi.html

Is it close to nothing the preference shares are worth? Whatever it is, it is currently a grim prognosis, no?

Many thanks. It’s probably wise not to deviate too far from the orginal post, but I think the two issues are related. Borrowing money directly (or using the NPRF) to recap the banks is seen as an “investment” where great pains are taken to differentiate this from borrowing to cover the current fiscal deficit. I doubt bond buyers are as comfortable with these “investments” as we might be led to believe.

I think you’re right, they used NPRF funds. Re valuing the investment, I’d say they’ll hold them at 7bn. I don’t know what rules apply to the NPRF, but I’d expect they’d argue a “Hold to maturity” line. Typically if you can make a good case that you expect no loss, you can hold at full value. If they had to use a mark-to-market or mark-to-model, they’d probably have to reduce the value of their investment. Obviously, the NPRF will make a large loss if they convert prefs to ordinary shares.

I suppose an option for the NPRF, if they receive the coupon in shares, is to transfer them (internally) to their discretionary portfolio in return for cash.

While we have managed to sort out our short term funding problems, our rate of deflation (both cpi and GDP) is higher than other peripheral eurozone economies.

The real costs of servicing our debts (as the chart highlights) are quite high.

I do hope that jto and Mr. Schnautz are correct, but there still seems to be some risk that we have only managed to postpone our debt crisis.

Not directly related to this thread, but an interesting note from Rossa White of Davys on how we wasted the boom http://www.davydirect.ie/content/pubarticles/economy20100219.pdf

includes a chart on 10 year bond yields for the PIIGS against Germany. While the Greek spread, not surprisingly, is heading for the stratosphere, Ireland’s seems to have merely stabilised above the others. I had expected some reward - in terms of a narrowing of the spread - for the “rectal fiscitude” of the Budget. Perhaps the prospect of a delayed reward is being flagged up in the RTE story. Still, the delay would worry me a little. Are other concerns sustaining the current spread?

in my inbox this morning…

“its actually truly amazing how ireland has weathered the latest soverign mini panic. perfect pr + execution. people love the way they pre-funded, have a much longer maturity profile than greece for example and have now issued more than 40% of total issuance for the year.”

But of course, David McWilliams was just on Bloomberg telling anyone that would listen how we’re all actually screwed…

eh, what?

@ Karl

i still reckon BoI subordinated debt gets wiped out via d-for-e swap in next month or two, and that gives them the flexibility to pay te pref coupon again.

COST OF STATE BORROWING FALLING - Investors are taking a more favourable view of the Irish economy due to Government action in the budget, resulting in a fall in the cost of state borrowing, says the Irish Examiner. That trend is set to continue and it is predicted the extra yield investors demand to hold Irish bonds could fall by 0.5% within weeks. Commerzbank AG said yesterday that the tough measures Ireland has taken and its ability to cope on its own with its budgetary problems should see the yield differences fall further. The spread could fall by between 80 and 70 basis points in two months after Ireland slashed spending. THE CREATION OF NAMA HAS ALSO HELPED IRELAND’S INTERNATIONAL PROFILE, said David Schnautz, an interest-rate strategist at Commerzbank in Frankfurt.

Seems to go against the consensus on this site. But, then he’s only the interest-rate strategist at Commerzbank in Frankfurt. So what would he know compared with Morgan Kelly, Karl Whelan and Brian Lucey?

Don’t be shy, Tell me what the Warrant of the Equity is worth”

thats actually pretty funny

And what was it that Minister Gormley didn’t explain to you about that when he led his party into a “New” “Clean” “Smart” “Green” “Jobs” “Economy”?

Ye of little faith.

The “Green Smart New Equal Money Love Change Economy” is Real.

Get Faith. Get Loved Up. Do New Green Head Shop Drugs. What’s wrong with you?

This is not about you Karl. This is Religion.

Pay your Carbon Tax and LOVE your anointed Green Lords.

I say it’s not worth the paper you wipe your arse with Bond.

What do you say the Warrant on the equity is worth Bond?

You work in a “Bank” you do “Bond” stuff.

Don’t be shy, Tell me what the Warrant of the Equity is worth.

Was that just some Nominal Nonsense that a Minister Swore in front of the Citizens?

Where’s the money Bond?

Has the Minister already given you a promise Bond?

I have asked this question again and again.

I believe that the €7,000,000,000 (not the interest on it) is, and, was lost from day one.

The €7,000,000,000 has a legal value of €70,000,000,

The Minister designed it such.

Now “Mr Bond” “James Bond” “Eoin” “Eoin.Bond” “Eoin Eoin.Bond” or whatever multiple personality disorder he/she or (his or her girlfriend) has, would have me believe that that is not the case.

“MrBondJamesBondEoinEoinBondEoinEoinBond” would have me believe that the Minister is doing this for the good of the bondholders.

And he would be correct.

The Minister is not doing it for the good of the Citizen.

What say you Bond?

Is there any chance that a Fianna Fail Minister could swear an affidavit that there is and never was any “legally binding” obligation to pay a dividend/coupon on the Preference Shares, and, have his legal representatives present that affidavit to a Judge of the High Court?

Is there any chance that the Soldiers of the Planet (that’s right not Soldiers of Destiny) could give that Minister a vote of confidence?

Is there any chance that the Soldiers of the Planet having found out that the Soldiers of Destiny may have been a little economic with the truth, might demand the head the Fianna Fail Minister who lead them to believe that dividends would be paid?

And if there is any chance of that, is there any chance that the Green Party will let the Citizens enjoy the head of that Minister in a basket with organic chips?

Oh dear Karl?

Did Ireland just wake up to the fact that the €7,000,000,000 preference shares are utterly worthless?

It’s on days like these that we need the people of Limerick to give Ireland a lead.

But the people of Limerick have let themselves down again, as usual, in their ambition to please the Feudal Lord.

Not unlike the people of Ireland.

Quelle Suprise..

Perhaps Daragh O’Bryan doesn’t know of the existence of these, http://www.fixedincomeinvestor.co.uk/x/ic-bondtable.html?id=3015&stash=8A6ECD0&groupid=PIBS# perhaps just as well or the NTMA might be frog-marched into another glorious investment..

What is not surprising is that BoI are going out of business, what is surprising is that Davys are still in it…

“The likely endgame in relation to this issue has been clear for some time (and some would say has been from the start)”
Indeed, some would

There was never any need to chase the pretty cailin Irish banks, act coy and they’ll fall into your lap.

don’t get angry, instead buy their LT2 with a coupon at 10% which is trading below par.

the state bought in cheap, there is nothing to say they didn’t or couldn’t make anything on the secondary market, and of course, let us not forget: the rip off was built in from the start, I wouldn’t be surprised if they issue an IOU.