The Anglo – Irish Bondholders, courtesy of Guido Fawkes
Minister for Finance Michael Noonan stated he was “not too pleased” about the repayment paid on November 2nd of a $1 billion (€715 million) bond to senior unsecured and unguaranteed bondholders at Anglo Irish Bank. Anglo and Irish Nationwide Building Society, now known as the Irish Bank Resolution Corporation (IBRC), are getting €34.7 billion in State capital to cover losses.
Noonan stated that the arrangements made by the previous Fianna Fáil government to secure Anglo “were a disaster”. Not only had a guarantee been given for the unguaranteed bonds, but the State had nationalised the bank. “By nationalising the bank they took it over lock, stock and barrel – liabilities as well as assets,” he said. The only way of the deal the incoming Government was in consultation and with the agreement of the European Central Bank.
“We just couldn’t get their agreement. But I’m not happy about it. This isn’t a great day where we are paying back bonds where the taxpayer had no liability whatsoever.”
Taoiseach Enda Kenny told the Dáil that he would love to stand up and say it was not necessary to pay the money. But the Government had made a case to the European Central Bank (ECB) and it was not possible to get its consent not to pay.
Mr Noonan said the ECB and the European authorities had agreed to work with the Government “on a common paper” to see if there was a better way of financing the promissory note.
“We have seen already that working in cooperation with the European Central Bank and the European authorities is a much better way to go forward. For example, the reduction in interest rates that the Taoiseach negotiated in mid- July, the central bank were very supportive in that for Ireland.” He said the promissory note through which the previous government had funded Anglo was “a very peculiar bit of financial engineering and it’s going to cost the Irish taxpayer overall about €47 billion between payback of capital and interest rate payments”.
Mr Noonan said there was not yet any commitment from the European authorities.The Minister said that if the Government could get, (for example), a 30-year loan from Europe at the interest rates currently applying to Ireland, it would take “about €10 billion” off the Anglo debt. Of Anglo’s €97 billion in liabilities in September 2008 when the previous government offered it a blanket guarantee, Mr Kenny said, €3.3 billion in unsecured private debts remained, including the €700 million due for repayment on November 2nd.
BondwatchIreland commented that the bond was issued in Nov 2006, and has been trading within the last 12 months on the secondary market at 52c –“ that’s a near 50% markdown, so someone stands to make a profit of almost 100% within 12 months. Obscene profiteering, even more obscene when you consider that last week the HSE informed those who are charged with looking after an increasing number of homeless that they would have to do so henceforth with a 10% cut in their budget – why? ‘Because the money isn’t there’.
Noonan unhappy at bond payout, November 2, 2011, Irish Times -http://www.irishtimes.com/newspaper/breaking/2011/1102/breaking12.html
Anglo-Irish Bondholders Should Take the Losses Is the ECB Forcing Ireland to Protect German Investments? - October 15th, 2010, Order – Order.com – http://order-order.com/2010/10/15/anglo-irish-bondholders-should-take-the-lossesis-the-ecb-forcing-ireland-to-protect-german-investments/
The Dirty Dozen w/e Nov 6th 2011, 31st October 2011 -
Bondwatch Ireland have a online petition against paying the bondholders: