Burning bondholders

IN communist countries after World War II, the state was paying to owners 10%–20% of their capital value.

Some of them didn’t even receive any compensation. Ireland has signalled its intention to confiscate part of the assets of AIB bondholders — subordinated bonds, through Irish High Court.

AIB shares are listed at the Irish stock exchange. AIB is not in default. AIB pays taxes, wages to employees, services the senior debts, pays coupons on preferential shares, sells assets and realises income. Ireland intends to take away the assets — some 80% of subordinated bonds under the recommendation of the Minister of Finance.

Why only subordinated bondholders? Because they had higher interest and higher risk. How will this end? In a couple of years, AIB will be profitable. Shares will rally, pension funds will earn double and subordinated bondholders will claim their property in European and international courts.

Dr Valentina Keredzin

Novi Sad

Serbia