Elderfield hints at bondholder discount

THE Financial Regulator has told a Dáil committee that there is scope for the Government to buy debt back from bondholders in the banks, at a discount, but warned that any approach should be made with extreme caution.

Addressing the Joint Oireachtas Committee on Economic Regulatory Affairs, yesterday, Matthew Elderfield noted the Government’s recent statement that it doesn’t intend to impose losses on senior bondholders in Anglo Irish Bank and Irish Nationwide, but “this doesn’t rule out the possibility of some negotiations or a liquidity management exercise agreed by consent”.

The Government is unlikely to change its stance on the issue, while Central Bank Governor Patrick Honohan advised only last week against contemplating discounts on senior debt.