Buoyant speculative market for IBRC bonds despite move to liquidate bank

There is a buoyant speculative market for IBRC bonds despite the Government’s move to liquidate the controversial bank.

XAIA Investments, a Munich-based boutiqueinvestment house that holds about €170m worth of subordinated bonds in IBRC, which it has taken over from Assenagon asset management, confirmed that they had received a number of offers from interested parties looking to buy their bonds.

Assenagon won a court case in London which saw the full value of their bonds restored following the Government’s attempts to force losses on them.

Chief executive of XAIA Investment, Wolfgang Klopfer confirmed that since the Government’s move to liquidate IBRC on Feb 6 they have received a number of offers.

“Several brokerages and banks have sent around offers,” he said.

Although it has been confirmed that about €750m of the estimated €1bn in transaction costs in winding up IBRC are set to be paid to bondholders, the Government had planned for subordinated bondholders to be wiped out.

Dr Klopfer said the price of the bonds remains unknown but there are parties who believe the deal will be illegal and the Government will be forced to pay subordinated bondholders.

“The funny thing is, what is the value of the bonds? The Government thinks that it is zero, but people think that there is much more than that.”

He added: “There are buyers at higher and lower prices. People are trying to get them cheap. Others are willing to pay more. They think the plan is highly illegal.”

Legal sources in London have confirmed that there are a number of cases brewing against IBRC and the Government following the liquidation.

XAIA are still investigating what action they will take, but Mr Klopfer descried the situation as “interesting.”

“We are still investigating what is going on,” he said.

Davy’s analyst Emer Lang said unless you have to have knowledge of what is in the IBRC loan books, and what was performing, to be buying bonds with any assurance.

“If the price range being offered on the bonds is wide, then there is a suggestion that it is speculation,” she said.