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Deposits From Irish Private Households Amount To €87.2 Billion Time To Buy Government Bonds?


YouKnowWhatIMeanLike

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Irish Private Households are awash with cash to the staggering tune of €87.2 bn. all held in resident credit institutions where the pile of money is generating only a meager return. Is it time to buy government bonds with a high yield instead and snap up the CoCos to make a 10% killing? And why is government selling them if they are that profitable?
 
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Morgellons

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Yep, sounds like a good idea. War bonds were big when they were needed, this is an economical war of sorts.
 

corporal punishment

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Put 2k into prize bonds about 2 years ago and not a sausage so far, despite the sales pitch assuring me that there would be a return exceeding the interest I'd lose by withdrawing the cash from a bank account.
 

nonpartyboy

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Buying irish govt debt is only encouraging the wasters in charge to keep on wasting money.
 

bob3367

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Taxi Driver

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Irish Private Households are awash with cash to the staggering tune of €87.2 bn. all held in resident credit institutions where the pile of money is generating only a meager return. Is it time to buy government bonds with a high yield instead and snap up the CoCos to make a 10% killing? And why is government selling them if they are that profitable?
Maybe you should stay out of the investing game. There is a massive difference between the Contingent Convertible Capital Notes issued by banks and bonds issued by governments.
 

bob3367

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Put 2k into prize bonds about 2 years ago and not a sausage so far, despite the sales pitch assuring me that there would be a return exceeding the interest I'd lose by withdrawing the cash from a bank account.
Sausage....
 

YouKnowWhatIMeanLike

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Maybe you should stay out of the investing game. There is a massive difference between the Contingent Convertible Capital Notes issued by banks and bonds issued by governments.
can a regular taxpayer buy these CoCos as well or is this party by invitation only?
 

irish_bob

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Irish Private Households are awash with cash to the staggering tune of €87.2 bn. all held in resident credit institutions where the pile of money is generating only a meager return. Is it time to buy government bonds with a high yield instead and snap up the CoCos to make a 10% killing? And why is government selling them if they are that profitable?

irish bonds are paying less than most savings rates at the moment and buying for appreciation is risky
 

YouKnowWhatIMeanLike

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Anyone can buy them. They are listed on the Irish Stock Exchange.

Irish Stock Exchange - ShowSecTranche

A broker can arrange purchase. The size of the minimum trade and availability could be issues though.
with some credit pooling private households could snap up 87 of them and generate interest to the tune of €8.7bn per year no strings attached. what's the worst that could happen to the CoCos investment?
 

Taxi Driver

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with some credit pooling private households could snap up 87 of them and generate interest to the tune of €8.7bn per year no strings attached. what's the worst that could happen to the CoCos investment?
The worst that could happen is that you are wiped out. If BOI's Tier One Capital drops below a certain threshold (8.75%) these subordinated bonds are automatically converted to equity. The redemption amount that is due on maturity (€1 billion in aggregate) is cancelled and the bondholders get shares instead of cash. That would result in massive losses for the holders of these CoCos. There is a good reason they have a yield close to 10%.
 

DownTheyGo

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The worst that could happen is that you are wiped out. If BOI's Tier One Capital drops below a certain threshold (8.75%) these subordinated bonds are automatically converted to equity. The redemption amount that is due on maturity (€1 billion in aggregate) is cancelled and the bondholders get shares instead of cash. That would result in massive losses for the holders of these CoCos. There is a good reason they have a yield close to 10%.
Go on TD, tell us, did you invest? :)
 

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