Jump to content
House Price Crash Forum
Sign in to follow this  
MOP

Anglo Irish May Stop Payments On Subordinated Debt

Recommended Posts

Anglo Irish May Stop Payments on Subordinated Debt (Update1)

July 9 (Bloomberg) -- Anglo Irish Bank Corp. said it may stop interest payments on some of its subordinated notes as it seeks approval to redeem as much as $4.5 billion of the debt.

The lender, which was seized by the government in January, may halt coupon payments on 1.2 billion euros ($1.68 billion) and 800 million pounds ($1.3 billion) of Tier 1 notes from September, the Dublin-based bank said today in a statement. The securities are issued by banks as capital required by regulators to cushion against losses.

Stopping interest payments on Tier 1 securities was a condition set by the European Commission when it approved a capital injection, the statement said. The Irish government has pumped 3 billion euros into the bank, the country’s third biggest, to boost capital eroded by losses on property loans. The bank posted a loss for the six months to March 31 of 3.77 billion euros.

“Obviously every euro less offered to bondholders is a euro gained by the Irish taxpayer,†Scott Rankin, analyst at securities firm Davy, said in a research note today. “In making its decision, the government will have to balance this upside with the possible downside associated with annoying liquidity providers.â€

The bank is “actively working†on a plan to buy back the Tier 1 notes, as well as 750 million euros and 300 million pounds of higher-ranking Tier 2 debt, the statement said. The offer is subject to regulatory and Department of Finance approval, it said.

Bond Buyback

The terms set by Europe allow the issuer to pay interest on one series of the Tier 1 securities, known as Tier One Non- Innovative Capital Securities, or “Tonics,†on July 23, the statement said.

Anglo Irish said May 29 that it will provide 7.5 billion euros to cover souring real estate loans. About 80 percent of its loans are to the property sector in Ireland, the U.K. and the U.S.

The government took control of the bank in January after a series of controversies. Chairman Sean Fitzpatrick resigned in December after saying he didn’t fully disclose his borrowings from the bank over an eight-year period. Chief Executive Officer David Drumm and Chief Financial Officer Willie McAteer also resigned.

To contact the reporter on this story: Ian Guider in Dublin at iguider@bloomberg.net.

Last Updated: July 9, 2009 07:08 EDT

http://www.bloomberg.com/apps/news?pid=206...id=akECoiS4.1Xs

Share this post


Link to post
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
Sign in to follow this  

  • Recently Browsing   0 members

    No registered users viewing this page.

  • The Prime Minister stated that there were three Brexit options available to the UK:   288 members have voted

    1. 1. Which of the Prime Minister's options would you choose?


      • Leave with the negotiated deal
      • Remain
      • Leave with no deal

    Please sign in or register to vote in this poll. View topic


×

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.