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Message to TDs - Don't Pay Anglo Bondholders

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I sent the following message to all TDs this morning:

Dear Deputy

I wish to protest in the strongest possible terms about the proposed redemption at par value of a US$1 billion bond (ISIN ref. XS0273602622) on Wednesday 2nd November by Irish Bank Resolution Corporation, formerly Anglo,

Given that this unsecured and unguaranteed bond recently traded at just 53 percent of par value, why is the Government paying full value when the bond is rated Caa2 by Moody's and viewed as being of "poor standing ... subject to very high credit risk ... extremely poor credit quality"?

To put this in context, the proposed payment is equivalent to the salaries of about 2,500 extra nurses for five years; or one-fifth of the cuts and tax increases planned for the 2012 budget: or the full cost of the new national children's hospital.

Instead, the money will be used to give windfall profits to so-called sophisticated but anonymous bondholders who provided funds at the peak of the boom to a bank which was operating as a casino and which, thankfully, no longer trades.

I don't buy the argument that refusal to pay will cause contagion. It is very evident that contagion is (like taxes) for the "little people". Irish taxpayers don't like being treated like Darby O'Gills and are entitled to expect their public representatives and Government to stand up for their rights.

I have two questions:

1. According to brokers in New York, the bond is expected to be paid in full. Given that the redemption date was settled years ago, why were no steps taken to secure a substantial discount?

2. If the Government is being forced to pay at par to prevent  EU-wide contagion etc., will the IMF. EU and ECB compensate the State for this specific action?

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This page contains a single entry by Brian published on October 30, 2011 1:27 PM.

Sick, Tired and Annoyed was the previous entry in this blog.

Bank Inquiry Snookered? is the next entry in this blog.

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