They have hired powerful US law firm Bingham McCutchen to represent their views to the government, although a source close to the group played down the threat of litigation last night.
The government signaled last month that the restructuring of subordinated bank debt already being implemented by nationalised lender Anglo Irish – known as a “haircut” – could be replicated across the sector.
The group says this could have an adverse affect on Irish bonds and slow the country’s recovery.
One group member City A.M. the process is “out of control” and that the effect on capital markets could be “catastrophic”.
The group is also worried new legislation being discussed in Europe to force bondholders to take a hit when banks are bailed out could be retrospectively applied to them.
Finance minister Brian Lenihan announced that senior bondholders will not be forced to shoulder the cost of the Irish bailout. He said in his budget statement there “is a limit to burden sharing”.