AIB debt buyback another kick to taxpayers

[cd27]

They're now swapping unguaranteed debt that could be written off against losses for new guaranteed stuff, you couldn't make it up,

The Irish Economy Blog Archive AIB Debt Buyback

The Irish Times fell for the spin!

AIB debt exchange will improve quality of capital in reserves - The Irish Times - Tue, Jun 23, 2009

"So, all told, this looks like a really good deal for the subdebt bondholders. A few months ago they were facing total wipeout. Today, they’ve taken losses of between 33 and 50 percent but they’ve obtained a bond with a far higher coupon payment and, perhaps more importantly, they’ve now most likely got themselves insured by the Irish taxpayer.

So what’s the future for the bank subdebt holders? Here’s one potential plan for dealing with these guys: Make it clear that NAMA is going to pay fair price, so shareholders are wiped out (or given some small compensation). Also announce that, despite this week’s legislation to make it possible to extend the existing guarantee, that any future extension won’t include subordinated debt. Then offer subordinated debt holders a debt-for-equity swap. This wouldn’t cost the state anything and it would provide some amount of private equity ownership that could keep the banks listed even if they’re 80-90 percent state-owned."

[cactusflower]

Well spotted.

[JCSkinner]

Oh, ffs. IMF by when, December? Earlier?

[cd27]

I think Karl Whelan's contributions on these issues have been invaluable, you'd think the press would be picking them up instead of following government line

[MsAnneThrope]

I suspect the Tribune and hopefully other newspapers will be all over this like a rash on Sunday. I sure hope so anyway. I might even wear a disguise and shades and buy the Indo on Sunday, if Shane Ross is on to this.

[cd27]

Willem Buiter's verdict on the ECB's actions,

FT.com | Willem Buiter's Maverecon | Recapitalising the banks through enhanced credit support: quasi-fiscal shenanigans in Frankfurt

"Interest subsidies and gifts are a slow, inefficient and inequitable way to recapitalise the banks. Japan pursued this strategy and created zombie banks that brought the country a lost decade. The right way to recapitalise banks is to have a mandatory conversion of unsecured bank debt into equity. If there is insufficient unsecured debt, the tax payer can come in as recapitalisor of last resort, but only in exchange for equity or some other claim on any future upside."

[goosebump]

Bloody stupid article.

Whelan's thesis is that because the new debt falls under the umbrella of the guarantee, that this presents a risk to the taxpayer.

Of course it does, but if we ever get anywhere even near a call on the guarantee, we're all fecked anyway.

The contrary view is that AIB has justed boosted its core capital by €1.1bn, which saves the taxpayer €1.1bn, provided the entire banking system doesn't collapse. And buying back debt when it is being traded at a deep discount is standard practice for coporations.

We appear to have witnessed the birth of the Celebrity Nerd i.e. some bloke who has a few letters after his name who enjoys being fawned on by dim-witted journalists.

[Jock_the_Waster]

They're now swapping unguaranteed debt that could be written off against losses for new guaranteed stuff, you couldn't make it up,

The Irish Economy Blog Archive AIB Debt Buyback

The Irish Times fell for the spin!

AIB debt exchange will improve quality of capital in reserves - The Irish Times - Tue, Jun 23, 2009

"So, all told, this looks like a really good deal for the subdebt bondholders. A few months ago they were facing total wipeout. Today, they’ve taken losses of between 33 and 50 percent but they’ve obtained a bond with a far higher coupon payment and, perhaps more importantly, they’ve now most likely got themselves insured by the Irish taxpayer.

So what’s the future for the bank subdebt holders? Here’s one potential plan for dealing with these guys: Make it clear that NAMA is going to pay fair price, so shareholders are wiped out (or given some small compensation). Also announce that, despite this week’s legislation to make it possible to extend the existing guarantee, that any future extension won’t include subordinated debt. Then offer subordinated debt holders a debt-for-equity swap. This wouldn’t cost the state anything and it would provide some amount of private equity ownership that could keep the banks listed even if they’re 80-90 percent state-owned."

posted 2 weeks ago but no one seemed to care then either

http://www.politics.ie/1775132-post1.html

the thread died here, either through ignorance or denial, Ican t figure it out...

[Jock_the_Waster]

I suspect the Tribune and hopefully other newspapers will be all over this like a rash on Sunday. I sure hope so anyway. I might even wear a disguise and shades and buy the Indo on Sunday, if Shane Ross is on to this.

posted 2 weeks ago here.... no one cares

http://www.politics.ie/1775132-post1.html

see?

only common thread is goosebump trying to deflect

[cd27]

ignorance for sure.

re goosebump, the issue is that the effect of their action is that MORE assets are guaranteed by the State