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Thread: Anglo's Senior Debt: Facts and Opinions

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    Default Anglo's Senior Debt: Facts and Opinions

    Brian Lenihan made a comment on Morning Ireland to the effect that it would be against Irish and EU Law to treat Anglo's depositors and senior debt holders in different ways.

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    You can't pay back the depositors and not the senior debt holders.

    I'm surprised this hasn't been debated more, as it really goes to the heart of the Anglo catastrophe. If he's correct, the only way the next Government could get out of the Anglo stranglehold would be by leaving the EU, which isn't something FG or Lab are going to do.

    As things stand, there is €16.5bn outstanding in senior debt (Emmet Oliver claims this is owed to European and UK pension funds Emmet Oliver: Defaulting on Anglo debts now on agenda - Analysis, Opinion - Independent.ie).

    There are 3 options in relation to this:

    1. Pay up
    2. "Renegotiate" it
    3. Force a debt-to-equity swap

    At 30c on €1, the latter 2 options will save the taxpayer €11.5 on the Anglo bill, which would equate to a €2bn fiscal correction each year for 10 years as opposed to a €3bn correction each year for 10 years (not counting INBS or other recap costs; this relates to Anglo alone).

    First off, what Irish and EU law is Lenihan talking about?

    Secondly, do posters agree that €11.5bn is realistically the maximum that can be saved by this 'default'?
    A demagogue is someone who will preach doctrines he knows to be untrue to men he knows to be idiots.

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    Irish law ranks depositors at the same level as senior bondholders. I think the legal phase is pari passu.

    Therefore if they attempted to force secured senior bondholders to take 30c on the €1 discount, it would be illegal not to force the same deal on the depositors. Burning depositors (ICB, ECB, credit unions etc) will not happen.

    That is my understanding of it anyway.

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    Can it be determined who are the senior bond holders?

    Is there a chance that the National pension fund is one of the bondholders??

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    What is the spread of the different types of debt?

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    Am I correct in thinking that most of Anglo debt is secured with property behind it and not simply derivatives so the government will make back some money on the debt in time?

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    Brian is a S.C.putting his own case, I would like to hear a S.C put the case that he is wrong. I believe it has happened elsewhere, it will not happen here because although he has been wrong on most things, he never will admit it, That is our downfall, That is why we will not recover under him.

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    Quote Originally Posted by Horses View Post
    Am I correct in thinking that most of Anglo debt is secured with property behind it and not simply derivatives so the government will make back some money on the debt in time?
    Perhaps. But we'll likely all be well dead by the time enough time has gone by for another boom to return. Come to that, the property in question will likely be in a state of decomposition, too.

    “Words are animals, alive with a will of their own”.

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    Quote Originally Posted by Horses View Post
    Am I correct in thinking that most of Anglo debt is secured with property behind it and not simply derivatives so the government will make back some money on the debt in time?
    eh no. The money going to Anglo and INBS will not be recovered.

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    Quote Originally Posted by lobby View Post
    Can it be determined who are the senior bond holders?

    Is there a chance that the National pension fund is one of the bondholders??
    I thought Bloomberg carried a schedule of senior bond holders?? John Galt or one of them should have access.

    NPRF may be a holder - I think they pulled their deposits away from Anglo so probably not. European banks make up the majority and large pension funds.

    The yield on senior debt is (or was) similar to the deposit rate so they aren't risk investors (unlike the sub debt guys who received a risk premium)

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    Quote Originally Posted by Horses View Post
    Am I correct in thinking that most of Anglo debt is secured with property behind it and not simply derivatives so the government will make back some money on the debt in time?
    That only applies to the debt assets transferred to NAMA.

    The recap money is gone. Will never be seen again.
    A demagogue is someone who will preach doctrines he knows to be untrue to men he knows to be idiots.

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