Statement on Paying Anglo (IBRC) Bondholders

02.11.2011

Statement by Senators Katherine Zappone, Jillian van Turnhout and Fiach MacConghaill

Paying Anglo (IBRC) Bondholders

Today is a judgment day.  The government’s judgment call to repay the €715 million bond to senior unsecured and unguaranteed bondholders at the Anglo Irish bank has been made with undue haste. 

As Independent Senators we call on the government to delay its decision to re-pay this bond until there has been a full public debate, inclusive of answers to the following questions:

1. Anglo Irish Bank issued this bond on 2 November 2006 and since that time Anglo’s bonds have been traded on the open market for as little as 50 cent on the euro.  Some of the investors in this bond, therefore, bought when they were heavily discounted and no doubt will make a huge profit when the bond is redeemed at full value.  Furthermore, we don’t know who the actual bondholders are. 

Prior to re-payment Irish taxpayers deserve answers to the following questions: who are these bondholders?  Why should we repay full value to them, which, in effect, amounts to rewarding speculative investment in an unsustainable property market?

2. While the Irish government did attempt to re-structure this particular bank debt it has been unsuccessful, largely due to the fact that the ECB insists on no bank ‘default’ whatever the circumstance.  In effect, the ECB is asking ordinary Irish workers and citizens to bear the full burden of the mistakes that were made by international financial markets.  Some of these mistakes, however, are at least partly attributable to following deregulation and liberalization policies that were advocated by the ECB and the IMF and these policies provided significant benefits to the financial sector.  The circumstance with regard to this bond is that a bank that is being wound down holds it and some of the bank’s actions are the subject of investigation. 

Prior to re-payment Irish taxpayers deserve an answer to the following question:  Is there no circumstance whereby it is right and proper for a Government that is part of the European Union to take a decision to discount or write-down bank debt?

3. The Irish Government is currently attempting to re-negotiate repayment of the €31billion promissory note to Anglo Irish bank.   Figures provided by the Minister for Finance in response to a PQ show that the cost of the promissory note will ultimately be €74.63 billion by the time it is paid off in 2031.  This includes the capital repayments, the interest payments to Anglo and the cost of servicing the state’s debt in borrowing this sum.  If the Government is successful in re-negotiating repayment for a longer period of time, say for example thirty or forty years, the cost to the Irish taxpayer will be considerably less than the €74.63 billion. 

Prior to re-payment of Anglo bond due now Irish taxpayers deserve an answer to the following question: Can the Irish government defer payment of the Anglo bond until it secures agreement with the ECB on a longer timeframe to re-pay the promissory note?

4. Hundreds of Irish citizens have been in direct communication with us as public representatives, arguing that they should have a say in how the finances of this country are spent, and that they do not give their consent for payment of the Anglo bond.  Rather, they ask: ‘why not use this money to make this year’s budget a less harsh affair for us?’ 

We think that Irish citizens and taxpayers deserve a full debate of these issues prior to re-payment of the Anglo bond as it is Irish taxpayers money that will be used to pay this debt.  Citizenship participation should be considered an integral part of Government strategy to bring about long-term sustainability of the Irish economy. 

2 November 2011
Ends.
Notes to Editor:
As of 15:30 this afternoon we have been unable to receive confirmation from either the Government or from the IBRC that the cheque has been issued.

Financial Justice
Financial Justice
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