Hedge funds hold Ireland to ransom over Anglo Irish, could trigger default

libertarian-right

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Hedge funds hold Ireland to ransom over Anglo Irish Bank bail-out - Telegraph

The investors are attempting to force the Irish authorities to pay them more for the debt they hold in Anglo Irish Bank and say if their demands are not met they could trigger a default crisis.

Anglo junior debt is trading in a range of 23 to 25 cents in the euro and the investors are thought to be looking for a payout of 35 to 40 cents.

The hedge funds in turn argue that the government has no legal right to force them to accept a haircut on the value of their holdings.


If the hedge funds were to press their case, Ireland could be required to put Anglo into insolvency, which could ultimately mean that depositors would have to make use of the country's guarantee scheme to get their money back.
What do posters think of this? Will they press ahead?
 


HarshBuzz

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it's a bargaining ploy by the hedgies

this debt is trading around 24c on the euro, we should pay no more than that
 

libertarian-right

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Without a liquidation, can they force the losses of the subordinated debt holders? My understanding is you cannot, therefore the government will be paying over the odds for this as insolvency has never been an option for the government.
 

galleyslave

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hedge fund operators are under immense pressure so will resort to any kind of scare tactics or bully boy nonsense they think they can get away with. I reckon if they were told to go forth and multiply that would be it.
 

Franzoni

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We should send gerry and the boys around to remind them who their dealing with.....:p
 

nuj

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That report is the ultimate in Telegraph journalism.

Not one source, not one shred of evidence. Nothing, in fact, that some idiot couldn't have posted on this site out of their own imagination.
 

nuj

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"...completely agree. It sounds like a begging letter. Almost bizarre in how it was written. It is also quite clearly the basis for the Telegraph article on sub debt at the end of last week - there is no "group" of hedge funds involved in this - probably just one very scared portfolio manager in Moscow wondering if Russian HR "firing" policies may be a touch more severe (and literal) than their Irish and UK equivalents"

From FT Alphaville » Abramovich vs Ireland

I'd sooner rely on the Sindo than the Daily Telegraph for news, let alone insight.
 

Chrisco

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On a side issue - I do hope that is an old photo of Lenihan the Telegraph were using, because he does not look like a well man.
 

Chrisco

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That report is the ultimate in Telegraph journalism.

Not one source, not one shred of evidence. Nothing, in fact, that some idiot couldn't have posted on this site out of their own imagination.
Not at all. For 'hedge funds' read 'Millhouse'.
 

sic transit

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That report is the ultimate in Telegraph journalism.

Not one source, not one shred of evidence. Nothing, in fact, that some idiot couldn't have posted on this site out of their own imagination.
+1
Somehow they've never been able to like us in any way. Although to be fair to them it appears to be a common practice amongst newspapers with an online presence.
 

Libero

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That report is the ultimate in Telegraph journalism.

Not one source, not one shred of evidence. Nothing, in fact, that some idiot couldn't have posted on this site out of their own imagination.
You might want to take that back.

Bloomberg are running with the story today, citing a telephone interview with a named director of Millhouse LLC in Moscow: Abramovich

In fairness to Abramovich and his Russian associates, they know an oligarchy when they see one. And they know how oligarchies behave: they look after the insiders, whatever the public cost.

There isn't even the semblance of an argument that Irish Nationwide Building Society is of systemic importance to the Irish economy. If it was wound up, we'd hardly notice. Unlike with Anglo, the size of the call on the deposit guarantee would be manageable, attractive even compared to the cost of paying bondholders 100% of their due.

How fitting that it's a Russian oligarch whose people recognise the real bargaining power of the subbies: pay us off or we petition for liquidation and go after the politically influential borrowers from the bank and generally mess up the NAMA game-plan.
 
D

Dylan2010

just do what Obama did when they took over GM , let the bondholders swing in the wind. The market would love it, and we'd get loads of good press around the world for being the pluckly little nation that mooned the bond market.
 

Chrisco

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just do what Obama did when they took over GM , let the bondholders swing in the wind. The market would love it, and we'd get loads of good press around the world for being the pluckly little nation that mooned the bond market.
There will always be buyers for US government debt.

Not the same for Ireland.
 
D

Dylan2010

There will always be buyers for US government debt.

Not the same for Ireland.
Not being the US is neither here nor there, markets are forward looking and only strive for clarity. Had the government not ring fenced Anglo I wouldnt need to be watching whether I need to move my money to a more stable banking system.I certainly wouldnt buy a 10 year Irish debt instrument with my own savings given the current uncertainty
 

slx

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There will always be buyers for US government debt.

Not the same for Ireland.
We keep hearing this mantra, over and over.
Is there any proof of this?

Can someone please cite me some examples of similar small nations which have had crisis like this and have been permanently frozen out of the bond market as a result?

The investors are brutally rational, I honestly cannot see why they would take some kind of personal vendetta against us. They're not going to bite off their own noses to spite their faces!

To me it sounds rather like the same mantra that was trotted out about how NAMA was the only solution. It was parroted at me by countless people, not just the Government.

Blind faith and lack of lateral thinking is not going to get us out of this!

We have to start thinking the unthinkable here! Being 'good boys and girls' isn't going to work and some serious hardball is required.
 

Aindriu

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On a side issue - I do hope that is an old photo of Lenihan the Telegraph were using, because he does not look like a well man.
If he is THAT ill he should stand down immediately!

It is ridiculous that he continues to hold the office of Minister for Finance whilst having cancer.

We need someone who is 100% fit in mind and body to undertake the role.
 

cyberianpan

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The idiots in charge of the FR/DoF never gave any proper thought as to how subordinated debt could be vaporised

Thus the only option is indeed to let the bank go to the wall

Also some may call for resoloution legislation... such is needed, but won't work retrospectively
 

Chrisco

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Not being the US is neither here nor there, markets are forward looking and only strive for clarity. Had the government not ring fenced Anglo I wouldnt need to be watching whether I need to move my money to a more stable banking system.I certainly wouldnt buy a 10 year Irish debt instrument with my own savings given the current uncertainty
Not being the US is rather important. People, the Chinese if nobody else, will keep buying US debt. It is not the same for Ireland.

We keep hearing this mantra, over and over.
Is there any proof of this?
I think you will find there is lots of proof that we are not the largest economy in the world, which the United States is. Therefore just because the US government can take one course of action does not mean that we can.

That is not to say, however, that Ireland should not try and do a deal with the senior bondholders. My point is that you have to be sure you are doing it understanding the circumstances, risks, and potential outcomes: and just because Obama was able to do it does not mean Ireland can.
 

slx

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If the EU would back us up on it, Ireland's part of the world's largest economy. The US is actually smaller.

$16.447 trillion EU GDP
$14.256 trillion US GDP
 

Chrisco

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If the EU would back us up on it, Ireland's part of the world's largest economy. The US is actually smaller.

$16.447 trillion EU GDP
$14.256 trillion US GDP
We do not sell EU bonds, we sell Government of Ireland ones.
 


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