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Posts tagged ‘Bonds’

Irish bank debt negotiations going nowhere

Enda Kenny

Enda Kenny (Photo credit: Wikipedia)

We have become used to broken promises in this financial crisis. Remember Enda Kenny in December 2010 after the Greens had pulled the plug on the previous administration and political parties were on an election footing. Remember “Mr Kenny said there is no question of defaulting on sovereign debt or on senior bank bonds that are covered by the Guarantee but he believes that the taxpayer can save between €12-17bn by negotiating a sharing of losses with the unguaranteed senior bondholders”. Of course that promise became more nuanced in the subsequent manifesto a month later but no-one ever disabused us of the notion that this government would pursue to success a significant write-down on the remaining senior bondholder debt. And in June this year, Enda emerged from the all-nighter of the EU summit to tell us that some people had just found out he was not someone to be tangled……………………

full article at source:http://namawinelake.wordpress.com/2012/09/10/irish-bank-debt-negotiations-going-nowhere/

€12m Anglo senior unsecured unguaranteed bond paid in full today

That’s more than the cost of the Jobs Initiative for one week.

By namawinelake

The cost of Minister Noonan’s inaction on Anglo Irish Bank (“Anglo”) and Irish Nationwide Building Society (INBS) is highlighted today as Anglo repays a €12m senior unsecured unguaranteed bond at par, that is without any haircut or discount. The bonds (ISIN ref: XS0306086157, SEDOL ref: B1ZBPV0) were issued in June 2007 – Sinn Fein finance spokesperson Pearse Doherty yesterday described the bonds as “unguaranteed unsecured” and there is no reason to doubt him. Historical prices appear to be unavailable at the Irish Stock Exchange this morning, but last month Anglo redeemed senior bonds which yielded 30% annualized returns to investors who had bought last December 2010. Our recently announced Jobs Initiative costs €470m per annum, so in a single transaction today we are spending more than the proceeds of one week’s raid on private pensions.

full article at source here : http://wp.me/pNlCf-1yL

Comment:

This amount could have paid the dole for one year to 1200 of the over 2900
(http://www.irishtimes.com/newspaper/breaking/2011/0629/breaking27.html)
people who now find themselves on the dole since the last numbers came out .Mr Noonan’s
incompetence is fast catching up with his predecessors levels and that was grim
to say the least.

Losing money and paying money men is the order of the day closing
down hospitals and essential health services is seems to be the way forward for
this Minster

Michael Noonan Spin and more spin !

Finance Minster, Michael Noonan before he got into
government said that the bail bailout was a bad deal for Ireland.”It’s been
priced too high”. The money that was been borrowed was been borrowed at 2.8%
and we’re paying 5.8%.

“3% of an add-on handling charge is extravagant and the
previous government should not have agreed to those conditions”. Mr Noonan they and you should not have
agreed to this obvious rip-off of the Irish taxpayers .The fact remains that
these debts are private debts that the private banks operating in this state
are fully responsible for these debts, you and the previous government did not
have the right to foist this odious debt on to the shoulders of the people of
Ireland .It is not a case of the interest is too high or the conditions are too
harsh it is simply a case of fraud.

Mr. Noonan and his band of overpaid political leaches are no
better that the international bondholders he seem to be bending over backwards
to reimburse by stealing the resources of our country. Plunging the nation into
a state of permanent financial slavery of its citizens is not going to help
anybody except his pals in Europe .Burden sharing with the unguaranteed senior
bondholders is just a side show and a blatant attempt by Mr. Noonan to position
himself and his government into a better light in view that his policy seems to
be “sit and watch” and let Europe make all the decisions he and the government
will then implement on their behalf.

The answer is simple the bondholders have given all this
money to the banks and they are now the legal owners of these banks, so these
banks should be handed over to the bondholders (All of them)

A debt for equity swap .they lent to the banks on the
strength of the banks collateral ,there was no guarantee given to these
bondholders that the Irish state would back up these loans in case of a bank
default .

The people of Ireland have been rightly screwed and they seemed
to be content with this situation if the latest polls are to be believed. It is
a s if the media are oblivious to the scale of fraud that is been perpetrated on
the Irish nation because every time a politician comes on to our TV screens
they do not get grilled on the real issues, there is no serious grilling of
these masters of spin about previous promises to the nation. The media and their
pampered talentless overpaid personalities are part of the status quo .

This is the time for us to play hardball with the ECB and the Bondholders

At least the Greeks are now been honest and they realize that they cannot continue rewarding bondholders and the corrupt practices of the ECB by taking on Austerity measures that are hurting its own people .As I have saying all along the bondholders that have made irrational business decisions must take the pain they are due for having made these disastrous decisions in the first place and the attempt to force these gambling debts on the taxpayers is not going to work

We here in Ireland are in the same boat and we will be the next in line we should now join Greece and force the ECB to face the fact we cannot pay back these private debts of mostly German banks.

If we don t take this opportunity now we will end up losing all of the funds we have in the pension fund and then we will have to default in any case. Our politicians are a bunch of whims and have no Balls we need guys that are able to play hardball right now and get better terms for the people of Ireland .Failing that we are heading for the door and leaving the Euro with Greece and maybe Portugal  .Only in our case we will be pushed out !

Citibank email sparks rumours of Greek default over Easter weekend

By Namawinelake

 It’s “devoid of any substance and verge on the ridiculous” according to the Greek finance ministry but as Greek 10-year bonds touch even greater highs this afternoon – presently trading at 14.9% mid-point – it seems that something may be afoot in bond markets. The claim is that a Citibank employee was responsible for an email which speculated that Greek authorities might seek to implement a restructure/default/burden-share scheme over the Easter holiday weekend.
Meanwhile, Ireland’s 10-year bond has reversed all the gains since the announcement of the stress test results on 31st March, 2011 and are presently trading at a record 10.28% mid-point compared with a previous record closing of 10.22% just before the announcement of the stress test results and details of the bank restructuring. Portugal’s 10-year bond is also in record territory trading at 9.5% mid-point. If there is any cheer it is thatSpain’s 10-year bond has eased back today to below 5.5%. It is still a mystery on here as to howSpain’s banks are so healthy and their property sector so relatively unscathed by the financial crisis and construction and housing bubble.
The concern is thatGreecewill default and thatIrelandwill follow closely on her heels. And if a default is inevitable forIrelandthere are actions that can be undertaken now to try to make the default as orderly and inexpensive as possible. Dealing robustly with bondholders (senior and subordinated) would fall into that category of discussion.

full article source: http://namawinelake.wordpress.com/2011/04/21/citibank-email-sparks-rumours-of-greek-default-over-easter-weekend/

Bondholders must be “Hedged” so why are we still expected to pay them out in Full??

 

I was on East CoastRadio  this morning  and I revealed that any bondholders worth his salt  must have had insurance against any loss on their positions (they must have been hedged”)

here is a video on one such hedging tools and there are many one can take out on any number of assets or positions

So why are the main political parties still insisting in bailing them out to the full value of their positions when in fact they are covered for potential  losses and if they haven’t taken out hedging then the Politicians want to still pay someone that has no insurance on his car or house so to speak !

This is just stupid and sheer madness.

Message to the voters of Wicklow the bondholders are covered and we do not need to bail them out, default now .

What’s new?

What’s new? 

This week it emerged more than half of the bondholders – whom it is often said should be burned by Ireland – may be located in Ireland.

What are senior and junior bondholders? 

Senior bank bonds and second-class bonds are two forms of interest-bearing debts issued by a bank. Second-class bonds are also known as sub-ordinated bonds because the rights of the bondholder are sub-ordinate to those of the senior bondholder.

Sub-ordinated bonds pay a higher annual interest rate but are a riskier investment and owners must bear losses sooner than senior bondholders. Senior bonds pay a lower interest rate but are safer, as the legal protection against default is tighter.

Sub-ordinated bondholders in Anglo Irish Bank, Allied Irish Banks and Bank of Ireland have already borne losses. Senior bondholders have not. They have been supported at the expense of taxpayers.

Will they get a post-election ‘haircut’? 

One way or another, each of the Opposition parties say that – if elected – they would compel senior bond investors to bear losses. This is controversial because Ireland’s European sponsors – the European Central Bank (ECB) especially – are trenchantly resistant to senior bond “haircuts”. The Government explored this before Ireland’s EU-IMF bailout last November but it was ruled out. It was dismissed again last Monday.

Why does Europe say no? 

The ECB, which has provided more than €130 billion to Irish banks, fears that any move to default on money due to senior bondholders would trigger contagion in eurozone bank markets. Removing protection from the highest-ranked bond investors in one euro country would create a threat to investors in vulnerable banks elsewhere. This threat could lead to runs on deposits from weak banks in other euro countries, with a consequent threat to apparently secure banks, too.

So why advocate a default? 

Because of the acute sense of injustice that surrounds Ireland’s bank rescue. To date, taxpayers have provided around €45 billion to Ireland’s banks. In essence, the argument is that the banks would need less new capital from the State if they were not obliged to repay senior bond investors in full.

Who are the bondholders? 

There is no official register of bondholders. Banks, pension funds and other institutional investors frequently hold senior bonds as a secure, if unspectacular, investment.

However, European sources this week gave credence to an academic evaluation of Irish Central Bank data that shows a little above half of all Irish bank bonds are held not by shadowy international speculators but within Ireland.

University College Cork lecturer Seamus Coffey says investors elsewhere in the eurozone and in London have significantly reduced their holdings of Irish bank bonds. Many of these have been transferred to Ireland. Coffey estimates that Irish-domiciled investors were owed €33 billion at the end of 2010, investors elsewhere in the eurozone were owed €10 billion, and investors in the rest of world were owed €20.5 billion.

So “burning the bondholders” would be an act of national self-harm? 

In the event of a default, a 25 per cent haircut for senior bondholders would be regarded as severe, triggering a financial loss for the holder. Though it is not known whether Irish banks hold each other’s senior bonds, if Irish banks suffered losses on each other’s bonds in this way, they might need yet more new capital.

For Ireland, any default must be measured against the risks. Ireland’s banks are dependent on ECB funding, as they are essentially shut out of the open market. Senior bond default would significantly increase funding costs, lessening prospects for any early return to the private inter-bank lending system. This is at odds with the ECB’s objective of weaning all banks off emergency financial aid.

It would also be likely to further tarnish the damaged credentials of the State. The aim of the bailout, after all, is to ensure Ireland regains the credibility required to borrow again from private investors.

In short? 

Don’t expect any move soon in this direction. In Ireland these days, Europe calls the shots.

source: http://www.irishtimes.com/newspaper/weekend/2011/0219/1224290263040.html

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