IRELAND offered junior bondholders in Allied Irish Banks 10 to 25 per cent of the value of their investment, in the first of a series of moves to force investors to share the burden of bailing out local banks.
The government is pushing on with a plan to generate around €5bn (£4.4bn) by imposing losses on subordinated bondholders in Irish banks despite a legal challenge by investors in state-owned Allied Irish Banks.
If the Allied Irish Banks offer were fully subscribed it would generate around €2bn, the bank said.
Finance minister Michael Noonan said holders of the Allied Irish securities, which have a nominal value of €2.6bn, were getting a reasonable deal.
Allied Irish has also said it will not pay any interest on the securities. If bondholders do not accept the offer they will get one cent for every €1,000 of debt they hold. The High Court will hear a challenge to the government’s moves against Allied Irish’s junior bondholders on 2 June by two investors who hold three of the 18 liabilities covered by the state’s order.
City A.M. Reporter