When are bondholders in Irish banks due to be re-paid?

Last Friday, a week ago, Anglo Irish Bank paid €200m to unsecured unguaranteed senior bondholders (XS0366099231, issued 27th May, 2008), redeeming their bonds at par, that is, without imposing any haircut. These bonds had been trading at 87c in the euro last December, 2010 according to the Irish Independent which would mean that an investor who bought those bonds then would see a return of 13c on a 87c investment in six months, which equates to an annual return of 29.9%.

Anglo is in receipt of €29.3bn of public funds. Anglo sold all its deposits to AIB in February 2011. The bank continues to claim on its website that “the Bank continues to provide business lending, treasury and private banking services to our range of customers across all our locations. Anglo Irish Bank remains committed to delivering a quality service to all of its customers” In truth new lending is understood to be minimal and is mostly aimed at maximizing the recoverability of existing loans. Branches are being closed and the latest is that Anglo will be merged with that other certified zombie, Irish Nationwide Building Society by the end of this year. The merged entity will manage the run-off of legacy non-NAMA loans. “Run-off” means getting the best deal on these loans, either by getting some repayment or selling the loans to others or negotiating a settlement with the borrower including debt forgiveness and potentially advancing new money to maximise the value of a lender’s assets.

Although the IMF advocated a haircut for bondholders last November 2010, and naturally it was the position of the Irish government and reputedly the Central Bank of Ireland, that private sector bondholders would share in the cost of the bailout, these views were over-ridden by the EU and particularly the ECB and also, reportedly, by the US Treasury Secretary, Timothy Geithner.

The Central Bank of Ireland published in March 2011 on a “once-off” basis the bondholdings in the six state-guaranteed financial institutions. This is its (corrected) summary.

A common question asked is when these bonds actually mature. The question is sometimes predicated on the notion that Irelandmight change its stance so it is important to know when the bonds fall due. Here is the precise bondholder position in each of the six state-guaranteed (or as the Central Bank of Irelandwould call them “covered institutions”). The information is firstly sorted by bank, then by maturity date. It should be said that this list remains a work in progress and there seems to be some discrepancy in some instances between the totals here and the totals published by the Central Bank.

In summary, there’s some €9bn of difference between the figures produced by the CBI in March 2011 and this present analysis. Work is continuing to identify the discrepancy and it’s too soon to claim another “Der Spiegel” moment. In terms of the analysis on here, some €7bn of the €73bn falls due in 2011, €20bn in 2012, €17bn in 2013 and €29bn in 2014 onwards. It should be said that a small number of bonds don’t have identifiable maturity dates and these have been grouped in the 2014- category. Here’s the summary with the CBI figures on the left and the NAMAwinelake analysis on the right.

And here’s the detail

Allied Irish Banks (AIB)

Anglo Irish Bank (Anglo)

Bank of Ireland

Educational Building Society (EBS)

Irish Life and Permanent

Irish Nationwide Building Society (INBS)

Notes:

(1) Some bonds are denominated in foreign currencies. The exchange rates and the meanings of the three character short form foreign currency can be found here at yahoo finance. So type in “MXN” on yahoo finance and that will display “Mexican Peso”. The following exchange rates were used.