'The Irish will cut off their own arms in order to pay bondholders'
THE READERS:What you said on irishtimes.com this week
The Michael Hasenstab interview
Earlier this year CNN Money picked the American bond trader Michael Hasenstab for its 40 Under 40, calling him “one of the biggest winners from the eurozone crisis”.
In an interview in California with Suzanne Lynch of The Irish Times, published on December 14th, Hasenstab said the turnaround in the Irish economy would be “one of the best investments of the decade”.
Hasenstab began buying Irish bonds in July 2011, when they were downgraded to junk status. Franklin Templeton, the investment company Hasenstab works for, now owns 10 per cent of Irish sovereign bonds.
In the interview, Hasenstab said Ireland should get relief on its bank debt because it deserved it, pointing out that his own funds would not be affected either way.
Responding on Monday to Hasenstab’s comments, Irish Times Business Editor John McManus wrote that “his endorsement of Ireland is a vote of confidence in the approach adopted in Ireland towards restoring order to the national finances and should steady the hand of the Government”.
The reaction on irishtimes.comin the week since the interview was published has been broadly positive, despite some people pointing out that the Government’s refusal to “burn the bondholders” contributed to Hasenstab’s success.
What follows is a selection from the comments that readers have posted. DAVID COCHRANE, Communities Editor
Hasenstab may be sitting on huge paper profits right now, but that doesn’t change the fact that his buying spree has driven the improvement in our bond spreads. Huge positions distort markets. Irish Government debt is benefiting from his faith in it right now, but if anything happens to upset that the fallout from a sell-off by Franklin Templeton could be disastrous. Leicheru
How is it even possible to write about this and not categorically state that this chap made a killing buying discounted stock in the secondary markets? It’s not rocket science. Incredible that bottom feeders are now the pinnacle, to some IT readers at least, of modern society. Go, Has, go: you da man! GerardCarthy
Why is he talking to the public? Is he trying to sell it? groggerz
Why wouldn’t he? The Irish will cut off their own arms in order to pay bondholders. They will starve their young, stop educating their youth, stop curing the sick, beggar the pensioners, throw thousands into abject poverty, condemn many tens of thousands to emigration in search of hope in order to pay bloody bondholders. So why is it any surprise that some financial “whizz” thinks Irish bonds are a good bet? ZackLeeWright
“The sharp increase in the value of Franklin Templeton’s Irish bonds means the fund is sitting on billions of euro of paper gains.” Not just paper gains but real gains! Unlike a share, which is basically a piece of paper whose price could collapse the day before you want to sell it, a €100 bond with a 5 per cent coupon is the equivalent of a €105 note, albeit one that can be cashed in only on the day the bond matures. The only risk is of default – but, really, Ireland was never going to default on its public debt.