Anglo Bond Note from DoF

The talking point about repayment of Anglo bonds not costing the taxpayer any money had received a sufficiently wide rollout that it was clear that this was something government politicians were being told was a good thing to say. Via Constantin, here is a note from the Department of Finance apparently distributed to government TDs.

The note tells the politicians that “It is important to state that the redemption of the bond will be made by the IBRC. It will not be funded by the Exchequer.”

Is it really important to state that? Why? So someone sitting at home might think that we’ve stumbled upon some money that eases the burden of paying the bonds, even though the US assets were being sold at a loss? So they might forget that the alternative to using the money to pay off the bonds is to return it to the exchequer?

Anglo has lost all of its equity capital multiple times over and has been continually recapitalised by the state. Money is fungible. All resources being used to pay off the bonds are state resources.

This talking point doesn’t work. Time to give it a rest. Please.

68 replies on “Anglo Bond Note from DoF”


I will grant you that. My version would be something along the lines of “we are under no obligation to repay these bond holders but owing to “pressure” from our EU partners and the ECB (paymasters?) , we deem it prudent to repay”

Exchequer figures for April 2011:

3,060m paid to Anglo/INBS.

So, as long as the initial payment was made to Anglo 6 monthes ago, we can pretend that the money they are using now is their own.

How about – our banks are funded by the ECB to the tune of €150bn. Given this situation we are obliged to pay this $ 1bn. But never mind, lads, the ECB hasn’t a hope in hell of getting its €150bn back.

I presume all those lost corporate deposits are expected to migrate back to Ireland at some stage along with the resurrection of the body and life everlasting.

At least Alan Dukes acknowledged in an interview yesterday that the IBRC had no money and that this payment really was coming from the Irish taxpayer.

The note appears to confirm my thesis about the non-existent ‘side letter’.

It says repayment is “a matter for IBRC”. Not required by X, Y or Z.

The best it can come up with for the parrots is “our European partners are against burden sharing”

If that is all they can support this with I think we can say with confidence that clause 2 of the non-existent Side Letter to the MoU is as the specific obligation at play here. Who wrote the newspaper article that is the source for the idea the Side Letter exists?

This is interesting . How Irish sovs compare on the global scale . Colombia, Peru, Indonesia, Mexico are all sexier and none of them repay bonds of dead banks.

I guess the market doesn’t buy An Taoiseach’s assurances :

“Given our vastly better economic circumstances compared with Greece, default would mark us out as a country that “won’t” rather than “can’t” pay our debts, killing off foreign direct investment and resulting in even higher borrowing costs for the State and Irish businesses that would strangle recovery and lower living standards for a generation.”

MoF had some interesting comments on Morning Ireland this a.m. about seeking to convert the promissory notes into EFSF funding, saving the Exchequer several billions in interest. Anyone know exactly what he said?

@ Ninap,

“seeking to convert the promissory notes into EFSF funding, saving the Exchequer several billions in interest”

I didn’t hear this interview, but I’ve heard this before. I think there’s a thread dealing with this somewhere on this site.

I’m not clear exactly where the money is saved. The coupon on the promissory notes is high, but who are we paying this interest to? Anglo. Anglo is state owned. It uses this money to cover losses and pay its creditors. In the unlikely event of making a profit, it would flow back to the exchequer. If you are always going to repay creditors, this seems like a closed loop and I don’t readily see where the savings are. Perhaps I’m missing something obvious. If I’m way off, hopefully someone will set me right.

@ Sophont,

good one. I’d say FG paid for it.

By the way, the story that something has gone pear-shaped with the EFSF bond sale won’t go away — WSJ, Wednesday:

LONDON—The European Financial Stability Facility, the euro zone’s temporary rescue fund, plans to hold off on selling the €3 billion bond to fund the bailout of Ireland due to volatile market conditions, a person familiar with the situation said Wednesday.

The EFSF held a call with investors Wednesday morning to give an update on its latest talks about the 10-year transaction, which it announced Monday.

Market participants had anticipated the bond would be launched in the middle of this week, although no official timing was ever stated.

While the proceeds from the deal will go to fund the bailout package for Ireland, the actual sale of the bond has very little to do with the status of the sovereign. The previous three bonds the EFSF sold this year have gone toward both the Irish and Portuguese aid packages.

@tull mcadoo

But in this case, we effectively are under an obligation to pay, right? We’re obliged to pay IBRC the money promised in the promissory note (or notes?), while IBRC is obliged to pay its creditors to the best of its ability. Even an IBRC insolvency wouldn’t change that. It’s just that in the case of insolvency the state as equityholder would be free to plead limited liability and refuse to put up still more money, not already paid or pledged to IBRC, to make the creditors whole.

Actually I have a hunch that this might explain where the oddly-shaped talking point that annoys KW came from. The conversation in the DoF and at the top of government could go like this:

STAGE 1: “Even if we wanted to face the political consequences of burning the IBRC seniors, we wouldn’t have a leg to stand on. Between the promissories and the other assets, IBRC now has enough to pay off everything, and clawing any of it back now would amount to a sovereign default.”

STAGE 2: “And think about it: it’s hardly bad news that Anglo is not such a black hole that we have to pledge even more money, or face the music for refusing. The glass is definitely half-full here.”

STAGE 3: “We really have to make sure the public understands this. One the one hand, we’re firmly on the hook for the money already pledged through the promissories. On the other hand, the question of putting up any further money doesn’t even arise, because it turns out the promissories will cover it all, and we’ll even get some of that money back.”

STAGE 4: “But we’re not actually going to go drawing everyone’s attention to how badly the promissory notes have snared us here, are we? That would be cutting rods for our own back. Let’s be smart and just accentuate the positive.”

So the government ends up planning to fête the silver lining while not letting on about the black cloud. One or two more rounds of PR refinement, perhaps, and we end up with the slightly incomprehensible message that reached the public.


I think Cormac Lucey made the point on another thread that IBRC is now solvent thanks to the generosity of the tax payer. Therefore it has to meet its obligations as they fall due.

The talking point is a bit Jesuitical. Pehaps Karl is objecting because he did not have the benefit of a Jesuit education.


It was also stated that Cormacs definition of ‘solvency’ was not actually solvency it was actually being liquid over a short window. Being liquid today means I go and take out all my salary from the ATM machine before the DDs hit the account next week.

Sure I have cash in my pocket but my DD creditors won’t be paid when the DD bounces back to them.

This sadly is the IBRC today – they’ve sold their US assets and have the cash in the account – the DoF and perhaps Cormac Lucey may believe they are solvent. Sadly nothing could be further from the truth. Because when the Unguarnateed Bond holders are paid the public servants DDs hit the account next week they will bounce and the PS will be going back to the IMF looking for the loot to pay the teachers and the guards.

Leo Varadkar I believe should resign for following the DoF party line on the grounds of being an idiot and not having the brain power to work out the mechanics of whats going on here. His VB comments in relation to this issue last week were pathetic and embarrassing.

Almost all assets (especially non agricultural / industrial property) held by western banks have no wealth generating function – they could only sell for a decent amount of cash as long as credit is available in countries where there is still credit available.
The entire western financial system is a sick joke – it has plugged itself directly into the oilfields of Arabia & the sweat shops of Asia and divorced itself from all organic domestic wealth generation.

As long as our money supply is tied to these great white elephants we will sink & sink & sink.

@tull mcadoo

I think Cormac Lucey made the point on another thread that IBRC is now solvent thanks to the generosity of the tax payer. Therefore it has to meet its obligations as they fall due.

Yes, I took my information from that. But further, I don’t see how even an IBRC insolvency would get us off the hook for the promissories. It’s not the debtors who get the haircuts…

The talking point is a bit Jesuitical.

Yes, but the thing is that even as a cute argument it’s a bit of a failure: it’s hard to mislead people with an argument they don’t even imagine they understand. But I suppose that like most sleazy casuistic arguments, the person it’s primarily intended to fool is the one who came up with it.

@Yields or Bust

Because when the Unguaranteed Bond holders are paid the public servants DDs hit the account next week they will bounce and the PS will be going back to the IMF looking for the loot to pay the teachers and the guards.

But this isn’t relevant from IBRC’s point of view: it has to pay its creditors as best it can, and its equityholder is junior to all creditors, no matter how badly the equityholder needs more money. From the government’s point of view, an argument that we shouldn’t pay the IBRC promissories because we can’t afford to is an argument for sovereign default. And the immediate problem there isn’t that sovereign default is automatically unthinkable (though fwiw I’m still agin it) or that we couldn’t play favourites with our creditors in the event of a sovereign default (we certainly could). It’s that default is fairly binary, so we might as well be hanged for a sheep as a lamb. If we were to press the default button we’d want to tear a big chunk out of our total debt load in order to justify the costs of default: there’s not much point in enduring most of the consequences of a sensible-sized default in exchange for a pinprick debt reduction. Most likely we’d find ourselves forced to default again shortly afterwards.

This speaking point is wholly disingenuous.

It is grossly unfair on and disrespectful on politicians for the DoF to prompt them to regurgitate such arguments. Politicians rely on Department officials for information. Information such as this robs politicians of their integrity and credibility. This does damage to the political system as a whole.

It may be that the Govt asked the Dept to craft something to make the square peg of repaying the bond fit into the round hole of FG/Lab election promises. However, that is no excuse. The Dept must be independent of the politicians and must tell them the facts as they are. Politicians should come up with their own distirtions and take responsibility for them if that is what is necessary politically. The Dept should not get involved in such politicking.

Mr Kenny said the repayment was on foot of a commitment entered into “at the highest level by the previous government and our external partners.”

Enda Kenny told us that he would tell us everything that was going on. Perhaps he would explain the nature of this commitment at the highest level? Crucially is it tied to reciprocal commitments by our partners, specifically in future debt write downs in the context of other write downs for others?

Whilst “Paddy likes to know what is going on” as Enda says, I think we will all let him keep his counsel if the previous Govt did a beneficial deal with our partners which depends on it being kept secret.


“But this isn’t relevant from IBRC’s point of view: it has to pay its creditors as best it can, and its equityholder is junior to all creditors, no matter how badly the equityholder needs more money.”

We could use legislation to impose losses over the head of equity in the same way we did with subbies

Can’t help but feel the SF and ULA walkouts in the Dail today are more for show than anything else.

We all knew this was coming.

@Ahura Mazda

Belated thanks for your response. I’m sure you are right, unless the Minister had some sort of eventual write down or burden sharing (with the EFSF) in mind in respect of the re-capitalisations.

Perhaps DOF officials might, in future, leave the formulation of propaganda ‘lines to take’ to that cadre of (grossly overpaid) Special Advisors currently employed by members of the Cabinet? For one thing, it’s not what civil servants are paid to do and, for another, they’re clearly no good at it. What we have here is one set of administrators, who haven’t exactly covered themselves in glory, this week in terms of their competence and efficiency in their primary function advising the political set of administrators on how to gull the public into believing that their geese are swans.

Even more disconcerting to hear Michael Noonan on radio this morning parroting further lines from this so-called advice note about the woes of the Greeks, and then go on to read precisely the same lines in an Irish Times article penned by Enda Kenny. That’s OK then: if one line comes a cropper, just move on to the next… Worse, refusing time for a parliamentary debate on the bonds issue is really going to impress the public, especially when there are even larger bonds maturing for payment early in the new year.

Kenny et al are caught in a trap of their own making. The reckless populism of their time in opposition, and, in particular, the needless, reckless populism with which they indulged themselvesduring the February general election is now confronted by the reality of being in government. One might have some sympathy for them were it not for the fact that they were well aware of what their responsibilities in government were going to be at the same time they were declaiming the payment of Anglo bonds as ‘obscene’, etc. as part of wider publicity/ vote-gathering exercises.

Various commentators, including Alan Dukes and John McHale, have put forward reasoned, pragmatic arguments for the current course of action, leaving it up to the public to judge for themselves as to whether it’s right or not. Members of the government would have been better advised to adopt such lines of straight-talking than the PR nonsense they’ve been going on with. After nine months’ political honeymoon, this crowd seem determined to wreck their credibility in as short a time as possible.


I remember John McHale’s arguments in support of the state’s course of action over the past year-and-some, so I’m boggled to see them held up as models of candour and good judgement.

1. John McHale Says:
December 1st, 2010 at 10:30 am
I know there is no appetite to hear this, but I think there is a reasonable chance that the plan can work. It is important to see what has been achieved: We have secure funding to cover our budget deficit for next next few years and we have an (implicit) commitment of the ECB to prevent the complete collapse of the banks. We thus have bought time and goodwill. If Patrick Honohan is right about the banks and we get even half decent growth — admittedly big ifs — we will get through this without default. If eventually a restructuring is required, and I certainly do not rule that out, we will have a much better chance of avoiding a “sudden stop” of funding if we have maintained the goodwill of our potential funders and we do it as part of broader EU resolution mechanism.

Colm McCarthy could usefully remind us again that “anger is not a policy”.

1. ****Kevin O’Rourke Says:
December 1st, 2010 at 10:48 am
It is not just Barry Eichengreen, Martin Wolf, Buiter, and many other respected overseas commentators who don’t believe you John; the markets are screaming as loudly as they can that they don’t believe you. The two ifs you mention are just too big an ask. We have been provided with liquidity, and yet our yields are up. The markets believe that this is a solvency crisis, not a liquidity crisis, and until something is done to address our debt overhang (and, indeed, our macroeconomic situation) they won’t change their mind.
So: we can default on bank-related debt now, or on sovereign debt later. I know which I prefer.

So, just to wade through the muck here a little bit, the situation is this: the billions of capital poured into Anglo by the past two governments has made the bank technically solvent, and as such it is legally obliged to pay its unsecured creditors? I feel like going out to celebrate.

What happened to the unsecured bondholders in ILPM? didn’t some of them get taken to the cleaners ? Why do the Anglo bondwallahs get treated differently ? Is it something to do with rugby?

@ anonym,

I didn’t say that John McHale or Alan Dukes are right; simply that they presented reasoned and dispassionate argument based on the facts, allowing the listener/viewer to weigh up for themselves the merits of going either way on this decision. I should have included Stephen Donnelly TD as an example, too, of an intelligent approach. My point is that such presentations are preferable to stupid ‘lines to take’ spin and that members of the government might consider a different line of approach to such issues in the future. Otherwise they risk squandering their remaining credibility and that’s hardly in anyone’s interests, not least their own.


Yes. For the first time since he accepted the electric chair at anglo-irish bank I must say I was quite impressed with 2_of_Seven’s candour on this occasion; which totally contradicts the spin put out by the DoF & Gov

7_of_Nine cautions, however, that it might simply have been a minor glitch in the wiring, and that the ass_immolation is programmed to run its course until all the blood of the citizen_serfs runs dry. Patricia_the_Irish Sovereign_in_exile is not impressed; and Blind Biddy is presently in Teheran.

@ Ninap,

Re promissory notes: note that I’m referring to the interest element of the notes – as it seems to get the most attention, though I think it’s a bit of a red herring.

However, there is the option of delaying payments (so the savings are a result of a lower government borrowing requirement. i.e. if the gov puts 3bn capital in Anglo today, it has to borrow that money and pay interest on this new gov. debt. If putting capital in could be deferred 10yrs, there are significant debt servicing savings).

But remember that putting money in is to cover losses and repay creditors. So the way I see it, this is a renegotiation with the bank’s creditors and perhaps a bit of creativity on when to recognise losses. As such, this doesn’t relate to promissory notes (anglo’s assets), but a restructure of the liabilties of Anglo’s balance sheet.

I don’t think it’s accurate to talk about renegotiating promissory notes. If anything it’s a negotiation with bank creditors.

Sophont: “AM
Peter Mathews is on vacation, so says his office anyhow.”

You must be f****** kidding me. For someone who traded on his financial expertise to get elected to go missing at a time like this…

Did any posters on this site buy one of the Anglo-Irish bonds in mid-summer?

According to RTE, anyone who bought one of them in mid-summer would have doubled his money by today. Since posters here are the cream of Ireland’s economics and investment community, I assume that some of them must have had the foresight to buy one of these bonds back in July/August, when those less intelligent than posters on here were proclaiming them to be worthless.

If there are any, please come forward. But, only so that we can congratulate you on your foresight and business/investment acumen. Your reward is wholly deserved. Unfortunately, I was not one of them.

If they did not make money it just proves they are honest souls – the nexus of finance & politics is where the rot is.
These transactions have nothing to do with creating new net wealth which maybe a one stage was at least part of the economics thingy.

Although there was always pillage – its normally easier and requires less work.
It certainly not investment as I understand it.
You regret not being a inside man do you ?

PS – these actions are destroying faith in money , not a good long term investment stratergy if you think life support is wealth – but who thinks long term these days ?

There are only 2 possibilities, Noonan and Veradkar believed the talking point to be true, or they did not. There is absolutely no grey area.

If the first, surely they would have to resign for incompetence in a normal country.

If the second they have lied about $1B! Surely again they would have to resign in a normal country. Can you imagine a UK minister surviving such a statement?

In response to comment about Anglo Bonds being available at half price in the summer.

If this was so, and the ECB were adamant that Ireland and its banks never be allowed default, then the ECB and/or the Irish MOF should have hoovered up every single Anglo Bond at that price.

Maybe they did.

Maybe that’s why the ECB want us to repay them in full.

To follow through on this point, if we decided to only pay back what the gamblers actually paid for the Anglo Bonds then I doubt if it would adversely impact on Ireland’s international credit rating when we next go to the market. We might even be lauded as saving the euro and then our Euro colleagues would also be empowered to also stand up to these gamblers and just pay them what they paid.

Or the ECB could Hoover everything up at a deep discount.

Any more creative ideas out there?

The note tells the politicians that “It is important to state that the redemption of the bond will be made by the IBRC. It will not be funded by the Exchequer.”

So Department officials are telling Government Ministers what to say and do. Just who is running this country anyway?

Tell Blind Biddy to get her ass out of there….Netenyahoo is going to test his new missile on Teheran and tHe Guardian is reporting the GB is dusting off the nukes.

Gosh, what a nasty piece if (soi disant republican) goods johnny optimism is. A troll and a scoundrel of the first water proving his lack of morality with comments such as this
Shame on you

Alan Dukes is way out his league. I don’t think he has the smarts to stand up for the taxpayer against the sharks.

JMc suggested the path of least resistance. Trust them they know what they are doing. I don’t know if he expected there to be so much malfeasance. Or ineptitude.

@ CP

I wonder is the Guardian thing just spin. The Brits are still stuck in Afghanistan innit.

Why are we in Afghanistan ? Very good question, old bean. Haven’t the foggiest.

Elements under the United Nation’s mandate to help the Afghan Government improve governance, both nationally and locally, include:

* tackling corruption and the drugs trade;
* building up the rule of law;
* promoting economic development – investing in infrastructure, agricultural alternatives to growing poppy, jobs;
* improving access to education and healthcare.

And how is that going ?

UK operations in Afghanistan are conducted under the name Operation WTF.


Blind Biddy is staying put. She is there at the request of the Royal College of Surgeons to lobby on behalf of her old GP, civilized bahrani whose wife is Biddy’s cousin, and who has just got a 15 year jail sentence in Bahrain for treating pro-democracy demonstrators while the big no-fly fleet stood idly by. Once Liberty_man learned that Biddy was in the ME he immediataly ran home to his mammy seeking sanctuary. Crisis over.


I hear that heroin production is up – and the price down for the 40,000 addicted around here.


“Did any posters on this site buy one of the Anglo-Irish bonds in mid-summer?”

Why? Why bother when there are far better opportunities in a very short timescale in the current crisis? Every crisis really is an opportunity. I turned ten grand into forty+ in two days. So what? You don ‘t have to be particularly smart or bright or be an ‘economist’ to do it imho. You just need to have the belief and have a basic understanding of human behaviour. The Canaries at Christmas is now somewhere else. I’m happy.

A point that the DoF should be challenged on:
The ECB forbade below par redemption/cancellation of bonds. However Anglo itself, or any State agent, could have purchased these bonds in the secondary market at discount.

@ JtO

As I’m sure you don’t need to be told, RTE aint great with figures. At least Shane Ross has a better stab at the maths today then some of the more excitable commentators out there when he noted that 60 cents was more or less the low point in all of this, implying a maximum 66% return for even those few people managing to catch the falling knife.

For the record, these bond traded at an absolute low of around 56 cents, for a week and a half in mid February, and other than that period have never traded below 62 cents. Further, other than the 5 weeks directly after that, they have never really traded below 70 cents. So can we stop with this fantasy that’s there’s a load of evil “speculators” (what is the difference between investment and speculation btw???) out there that have made many multiples of their initial investment on these bonds? Let’s at least talk from a position of fact.

How would Anglo have funded a buy back below par? By issuing another bond at a big coupon?

@ Tull

How would Anglo have funded a buy back below par?

With 60% of the money that was doled out today? The rest could have been spent on chocolate and ginger beer.

It wouldn’t need to fund it per se, as it would then hold the asset and liability (which would nett to an asset)

@ Veronica

Here is what Noonan he had to say about it last December. A stark illustration between being in opposition and government. Black is now White.

Thanks, Karl.

You are doing some great service to our state!!!

I assume the Public Accounts Committee is going to call in the author of this note and grill them on its misleading contents?

@all FYI Minister Noonan at The Ballroom of Finance this Thursday.

Due to high audience interest, the Minister for Finance’s keynote address to the IIEA next Thursday will now take place in the Ballroom of the Gresham Hotel, O’Connell Street. To ensure a place, IIEA members should register via as soon as possible.

If he finds any more billions I’m sure someone here will let us know.


So, RTE were wrong again. Thanks for that information. I certainly trust your analysis a million times more than that of RTE. Perhaps RTE got their information from a fake tweet like in the Presidential debate last week?

Veronica post makes the point more eloquently than my attempt.

The DoF should get out of the spin business. The Govt will force them out of that business if it has any sense. The DoF already did huge damage to FF by feeding disingenuous lines to back-benchers and Ministers. It does not matter if somebody in Govt asks them to provide cover. Other politicians, including Govt backbenchers and Ministers in other Departments, rely on their integrity.

It should also be noted that when officials adopt such a dishonest mode of communication that they totally undercut the ability of Parliament to properly scrutinise the actions of the Executive. How can people be held to account if the DoF thinks this statement qualifies as an honest and sufficient answer to their questions?

@ Zhou,

How long do you think this business of the DoF as ‘spinmeister’ has been going on? Certainly, I don’t recall it being a feature of public administration in the 1980s, when advice notes from Departmental officials set out the arguments in favour of a policy and then the counterarguments, in the style of ‘on the one hand, and on the other, the bishop has a ring’. That Sir Humphrey style may have been frustrating and occasionally hilarious, but infinitely preferable to the politicization of the civil service implied by this ‘lines to take’ format, which I personally regard as a corruption of the system.

Sadly, Karl’s pleas to the government to drop this line appear to have fallen on deaf ears. Michael McNamara, Labour TD for Clare, was spouting it again on the VB show last night, though given the basilisk glare old Vinnie immediately fastened upon him I doubt the poor man will be repeating it any time soon.


From a thread a few weeks ago.

““let’s take the opportunity to reflect on all that has gone on in Irish public and economic life, to assess how much real change there has been within the institutions that helped bring about the crisis, and perhaps to look a little towards the future. So fire away in the comments”

Resolute consistency.

The purpose of opposition politicians weave a web of words to catch as much of the publics’ imagination and voting power as possible. Success = office.

Hats off to all those who were able to explain the Irish economy to the journalists and public. Opposition politicians were predictably all over it – like rats on a loaf of bread. It was very useful to them.

Once an opposition politician becomes a member of a governing party, or even a minister, he or she then has a different function. If you spend decades honing your skills at saying things that you think people want to hear misrepresenting anything you can and being economical with the actualité, you need arse cover, big-time if you eventually have to run things. Your efforts have not been concentrated on actually becoming competent at much else. You are, with few exceptions, essentially a bluffer.

Fortunately there is a bluffers’ arse-covering unit specially designed to step in and prevent politicians from embarrassing themselves. It is called the “civil service”. Once in office, you need nerdy friends – and fast.

The deal is – the civil service and establishment generally give you a bullet-proof, conservative, defensible line, and you tow it.

Job done. Gold-plated pension earned.”

You might also have noted that within days of arriving in government, Bruton had changed his tune about the fact that depositors and senior bondholders were pari passu only in terms of the distribution of assets in a winding up (nothing to stop depositor compensation from the state).

He had obviously been given the same talking points that FF had been and kept repeating the phrase “senior bondholders and depositors are the same”.

All of this is always predictable.


I didn’t say that John McHale or Alan Dukes are right; simply that they presented reasoned and dispassionate argument based on the facts, allowing the listener/viewer to weigh up for themselves the merits of going either way on this decision.

I’m afraid that this is just what I refuse to accept. In the case of John McHale your statement is plainly, evidently untrue.


Oh, dear. I’m afraid I cannot accept your interpretation. Too narrow and, worse, a touch personalised. The world would be terminally boring, though, if we all agreed with one another, wouldn’t it? Besides, we’d never learn anything new.

All cash is a promissory note as a lot of people are just about to find out. A couple of Billion Euro sitting in a banks “computer” are merely digits. If the power is cut to the computer and the memory of the debt to the individual erased the world is just the same. We have mulitple overlapping debts, bonds, promissory notes, euro cash and ECB bonds. A debt is a promise to pay a future tax on your “production” to your creditor. Not much good if you have no production.

Why couldn’t Anglo do what ILPM did?

Wire: BLOOMBERG News (BN) Date: Aug 26 2011 16:37:52
Irish Life Raises 1 Billion Euros From Junior Bond Buyback

By Joe Brennan
Aug. 26 (Bloomberg) — Irish Life & Permanent Plc will
generate almost 1 billion euros of capital from
its program to buy back subordinated bonds, which is now
“effectively completed,” according to a company spokesman.
The Dublin-based lender’s liability management exercise
will generate 997 million euros, said Ray Gordon, the company
spokesman, after bondholders tendered bonds ahead of a delayed
settlement deadline for acceptances of its offer this week.
Irish Life, ordered by the central bank in March to raise 4
billion euros to shore up its unprofitable bank, offered to buy
back most of the bonds at an 80 percent discount to nominal

Anglo did – those are subordinate bonds. Anglo effectively burned subordinate bondholders once it got past the stage of buying them back for ridiculously oversized amounts.

@ Seafoid

“Why couldn’t Anglo do what ILPM did?”

they did, at a 95% discount for some tranches. Thats junior debt you’re looking at there…we’re talking about senior….

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