tag:blogger.com,1999:blog-2826531655042170344.post178815242254295444..comments2024-03-26T11:29:52.986+00:00Comments on Economic Incentives: Is repaying bondholders still an issue?Seamushttp://www.blogger.com/profile/15679299530222667673noreply@blogger.comBlogger4125tag:blogger.com,1999:blog-2826531655042170344.post-46493897864016601452012-01-22T17:42:33.352+00:002012-01-22T17:42:33.352+00:00Hi Fergus,
That is true. Unfortunately sharehold...Hi Fergus,<br /><br />That is true. Unfortunately shareholders and junior bondholders were not in a position to make larger contributions. Proportionately the State has made by far the largest contribution.<br /><br />I think Anglo had a peak market capitalisation of around €17 billion but shareholder contribution is limited to the level of shareholder equity in the bank. At you say that was less than €4 billion on 30/09/2008. What shareholders really lose is the expected flow of future profits. <br /><br />I haven't seen a breakdown by bank of the losses imposed on junior bondholders. The <a href="http://www.ntma.ie/Publications/2012/NTMAResultsAndBusinessReview2011.pdf" rel="nofollow">NTMA have revealed that</a>: <br /><br />"Since 2009 burden sharing measures have delivered €15.5 billion which would otherwise have had to be provided by the taxpayer"<br /><br />The original guarantee extended until September 2010 so it is somewhat surprising that there were losses imposed on junior debt in 2009. Maybe that's when we starting thinking about it. Anyway, again looking at the Anglo balance sheets it's hard to see more than €2 billion or €3 billion of possible savings. Maybe less.<br /><br />If the full extent of losses in Anglo turns out to be around €40 billion it looks like it will be junior bondholders €3 billion, shareholders €4 billion and the State €33 billion which will be covering them. The losses covered by bondholders and shareholders may be relatively small but you are right to suggest that they are not insignificant.Seamushttps://www.blogger.com/profile/15679299530222667673noreply@blogger.comtag:blogger.com,1999:blog-2826531655042170344.post-18890287746953876232012-01-22T10:22:53.013+00:002012-01-22T10:22:53.013+00:00Just a point of detail:
You say "We have fil...Just a point of detail:<br /><br />You say "We have filled that €30 billion+ gap" and I take it that you mean that "we, the Irish taxpayers". <br /><br />This is, of course and sadly, true, but there will be those who misinterpret it to mean that "we" have filled all of that gap ourselves. While this is nearly true, we should not forget that the shareholders - Gay Byrne and the like - took the first "hit" (€4 billion in "book" terms but much higher in reality), and as you mention, some bondholders have "chipped in" a billion here and there as well.FERGUS O'ROURKEhttp://www.irish-lawyer.comnoreply@blogger.comtag:blogger.com,1999:blog-2826531655042170344.post-66167659418880799722012-01-20T21:50:36.742+00:002012-01-20T21:50:36.742+00:00Well done, Vincent Browne.
Good post Seamus. I mis...Well done, Vincent Browne.<br />Good post Seamus. I missed that exchange last night.Joseph Ryanhttps://www.blogger.com/profile/07581632829548894401noreply@blogger.comtag:blogger.com,1999:blog-2826531655042170344.post-50807236343570195032012-01-20T10:05:49.836+00:002012-01-20T10:05:49.836+00:00Vinny is a Hero, it's too bad our government a...Vinny is a Hero, it's too bad our government are a bunch of spineless goonsAnonymousnoreply@blogger.com