Anglo junior bondholders will not be repaid in ‘any circumstances’, says Kenny

Public to be repaid before junior bondholders who are back of the queue, says Burton

 

People who hold junior Anglo Irish Bank debt will not be repaid in “any circumstances”, Taoiseach Enda Kenny has said.

Speaking in Dublin, Mr Kenny said he wanted to be clear that his Government was different to the previous Fianna Fáil-Green Party coalition.

“Fianna Fáil put the taxpayers first in line to suffer from the bank guarantee,” he said. “This Government put taxpayers first in line to benefit. I do not see any circumstances, any circumstances in which junior bondholders will be paid out of the liquidation of IBRC.”

In a reply to a parliamentary question last week, Minister for Finance Micahel Noonan said it was not clear if the Anglo junior bondholders would pursue claims for €280 million and “if there will be any money left over when other unsecured creditors are paid” after the liquidation of IBRC, which replaced Anglo.

The State bought back junior bonds in Anglo and Irish Nationwide at a discount but a small number of investors chose not to take up the buy-back offer.

Tánaiste Joan Burton on Monday said that junior debt was so called because it was a “very high risk” commodity and “therefore it comes for repayment after all other debts have been paid”. She said people had bought the debt at “very low prices on a totally speculative basis”.

“These junior bondholders would have bought this debt as vulture investors for very low prices and might expect, having bought it for a couple of cents, to try and get 100 cent back on the euro or on the dollar,” she said.

Ms Burton said they were at the back of the queue as other creditors arising from Anglo including the Irish State, State agencies and public “would have to be repaid first”.

Speaking in Brussels, Minister of State for Finance Simon Harris said if the liquidation of IBRC yields a surplus, there will be a priority order in terms of how outstanding charges are discharged and “junior, subordinated bondholders, by the virtue of them being subordinate, are at the very bottom of the pile”.

“I understand that the subordinated junior bondholders account for about €280 million but the Irish tax payer, the Minister for Finance is owed if you like as an unsecured creditor, €1.1 billion . The issue of junior bondholders will only arise if that €1.1 billion is paid in full along with unsecured creditors. “

“I think it’s a highly unlikely situation, it is one’s that’s highly unlikely to be resolved for a long number of years due to various issues of litigation.”