Anglo bonds to be repaid in full

A New York hedge fund, Fir Tree Capital, is due to have €152 million worth of subordinated Anglo bonds repaid in full after refusing to take the 80% haircut imposed on bondholders.

Other subordinated debt holders in Anglo took 80% haircuts on their holding of subordinated Anglo Irish Bank and Irish Nationwide debt after investors were led to believe they would get virtually nothing if they did not accept 80% discounts on their bonds.

Fir Tree Capital called the Government’s bluff and are now being paid interest and due to be repaid in full.

Sinn Féin’s Gerry Adams, who uncovered the payments in a parliamentary question said that it was a disgrace that junior bondholders were profiting on the gamble that they took on Anglo Irish Banks performance.

“One year after this Government took office no losses have been imposed on senior bondholders in Anglo/IBRC.

It is nothing short of a scandal that this bank is continuing to pay huge amounts of money in interest to junior bondholders in this zombie bank and intends to pay these gamblers back in full to the tune of $200 million with the taxpayers money at a time when health, education and other services are being cut,” he said.

Minister for Finance Micheal Noonan said that all of Fir Tree Capital’s bonds would be repaid in full in response to Mr Adams parliamentary question

“As things stand, IBRC has a contractual obligation to pay interest and principal on the notes,” said Mr Noonan.

He outlined payments made to Fir Tree since December 2010, The Government has paid nearly €2 million to Fir Tree on its first bond valued at €125.5 million. This bond has a maturity date toward the end of 2015.

Fir Tree Capital’s second bond, valued at €26.6 million has netted the company €1.28 million since March 2011. The bond pays 4.8% interest and won’t be paid off until 2017.

Mr Noonan went on to outline that Irish Bank Resolution Corporation has outstanding unguaranteed subordinated debt at Dec 31, 2011, of €370m. This excludes the €1bn contingent capital instrument investment subscribed by the state.