Govt urged to halt payment of unsecured Anglo bond

The Government is being urged not to allow the repayment of a $1bn (€715m) Anglo Irish Bank bond.

The payment of the bond to unsecured, unguaranteed bondholders is due tomorrow at noon.

Fianna Fáil is calling on Taoiseach Enda Kenny to contact the new president of the ECB Mario Draghi in a last-ditch effort to stop the repayment.

"Clearly the European Central Bank is opposing the move," said the party's finance spokesman Michael McGrath.

"But I think what the Taoiseach needs to establish today from Mario Draghi is exactly what is the bottom line of the ECB on this issue.

"If Ireland were to impose losses tomorrow on the bondholder concerned, would the ECB turn off the tap of funding for the Irish banks - which would be an extremely serious matter - or is the position of the ECB that it would just prefer Ireland to pay the bond in full."

Bondholders are typically institutions which lend money to countries in return for regular interest payments and the repayment of the principal at a fixed date.

The identities of the Anglo bondholders are unknown — such bonds are frequently traded. But €715m is due to be repaid tomorrow.

The decision has led to criticism: the Government has pumped €29bn of taxpayers’ money into Anglo, which has been merged with Irish Nationwide and is now called the Irish Bank Resolution Corporation.

Earlier this year, Finance Minister Michael Noonan signalled that he would seek to impose losses on unguaranteed, unsecured senior bondholders in Anglo, but was rebuffed by the ECB.

However, ECB head Jean-Claude Trichet is stepping down today and being replaced by Mr Draghi.

"There is a fundamental issue of equity in the EU at stake here," Mr McGrath said. "Greece has been granted a haircut of 50% of its sovereign debt held by European banks while the ECB is attempting to force Ireland to repay in full unsecured, unguaranteed bonds owed by failed Irish banks currently being wound up.

"Many reputable economists believe the bond should not be redeemed at all. Applying a 50% discount on the bond would save Ireland more than €350m."

The Government defended the decision to repay the bond, saying Ireland’s credibility and creditworthiness were at stake. Mr Noonan said the repayment will come from Anglo’s resources rather than being a "charge on the Irish taxpayer".

Members of the Occupy Dame Street protest group will march to the Department of Finance later to mark their opposition to the repayment of the Anglo bond.

The group has been camping outside the Central bank in Dublin since the start of October.

They say that the Irish state should not repay the debt - as the amount would pay the salaries of about 2,500 people.

It would also pay for extra nurses for five years, cover one-fifth of the cuts and tax increases planned for the 2012 Budget and cover the entire cost of the new National Children's Hospital.

Sinn Féin's Mary Lou McDonald also hit out at the Government for not convening the Dáil the day before the bond is to be repaid.

“Tomorrow the government will hand over €700m of taxpayers’ money to an unguaranteed, unsecure senior bondholder in Anglo Irish Bank," Deputy McDonald said.

“Last week my colleague and party leader Gerry Adams called on the Government to convene the Dáil today in advance of this handover to allow all parties to debate this important issue. They refused.

“Tomorrow’s payout comes just one month before an austerity budget which will inflict hardship on children, on carers, on the disabled and on the working poor. In January a further €1.2bn will be paid out – tomorrow is only the first payment of billions of taxpayers’ money.

“This is simply not acceptable and what is even more unacceptable is the fact that the Government would rather take a duvet day today than allow TDs to debate this crucial issue that will affect so many.

“There is still time to stop this outrageous handover," she added.

"The Government should do the right thing by the people and use this money for the good of the people, not toxic banks.”