BURDEN-SHARING:THE GOVERNMENT will seek to share losses with investors holding certain senior bonds in Anglo Irish Bank and Irish Nationwide Building Society through negotiation, Minister for Public Expenditure Brendan Howlin said.
The remaining unguaranteed senior unsecured bondholders in Anglo and Irish Nationwide were “legitimate targets for a haircut”, Mr Howlin told RTÉ radio.
The Government would raise burden-sharing with these bondholders in the next round of the discussions with the troika of the European Commission, the European Central Bank and the International Monetary Fund, he said.
Burden-sharing with the bondholders would be sought “by agreement” and “through clear, determined, competent negotiation”.
He ruled out plans to seek to impose losses on any senior bondholders at Bank of Ireland or Allied Irish Banks, saying the banks would be unable to borrow or function if senior bondholders at the two pillar banks were “burned”.
"They are the bedrock of the banking system that will grow our economy into the future," he told RTÉ's Today with Pat Kenny.
Ireland could not “play Russian roulette with the Irish economy” by walking away from the banks’ borrowings from the ECB and the Irish Central Bank, said the Minister. The central banks were “funding our entire banking system”, he said.
There is €2.8 billion of unguaranteed senior unsecured debt at Anglo and €600 million at Irish Nationwide.
The next major repayment of this type of debt at Anglo falls on November 2nd with the repayment of a $1 billion bond followed by a redemption of €1.25 billion on January 5th, 2012.
