Cost of insuring against default rises

THE cost of insuring Irish bank bonds against default increased after legislators approved a burden-sharing bill analysts said was harsher than expected.

The new law compels junior bondholders to share the cost of rescuing lenders after the Government was forced to accept a €85 billion aid package.

The Credit Institutions (Stablisation) Bill 2010, gives the finance minister the power to change bondholders’ rights, including interest and principal payments, as well as impose debt-for-equity swaps and asset transfers.