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Anglo Irish Bank bondholders have given initial support for a debt exchange offer launched by the troubled lender that would require them to share the pain of its rescue.
In a vote held in London on Friday, a majority of subordinated creditors holding the bank’s 2016 bonds, who have been targeted by the bank in the proposed debt exchange, backed resolutions that will allow the tender to go ahead.
EDITOR’S CHOICE
Anglo Irish bondholders face dilemma - Nov-18
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By supporting the so-called “notes purchase resolution”, the bondholders have moved closer to backing a deal that would return to investors just 20 per cent of the face value of their debt.
The terms offered to Anglo Irish’s bondholders are being watched closely across Europe for the precedent they may set for future bondholder forfeits in failing banks. Friday’s vote, which comes amid political pressure for bondholders to share the burden of any future bail-outs of eurozone countries, was an important test.
A second meeting of the 2016 bondholders will be held on December 22, at which they will vote on whether to accept the bank’s offer. The two stage process is necessary because of the terms under which the debt was issued.
Friday’s vote was key to the Anglo Irish restructuring plans because it was the vote believed to be most at risk of being blocked by funds opposed to the plans to enforce a deal that would see dissenting bondholders accept just 1 cent for every €1,000 of bonds they hold.
Separately on Friday, holders of the bank’s 2017 bonds - the biggest single issue targeted in the exchange offer - will be the first to vote on whether to actually accept the proposed “haircuts” and the results will be published on Monday. Anglo Irish declined to comment.
The terms of the Anglo Irish offer, believed by some observers to be harsh, has surprised the City and bondholders.
In addition to the 20 per cent offer – which was lower than most had expected – the deal includes a rare “sweeper” clause that means voting for the exchange also counts as a vote to “sweep up” any recalcitrant bondholders. One banker has described the sweeper as “bondholder cannibalism”.
Anglo Irish has taken nearly €30bn in public funds following losses from a property lending spree. The bank’s executives have so far refused to meet bondholders in spite of calls for negotiation, while government officials have threatened to force burden-sharing if the bondholders refuse to back the deal on offer.
Anglo Irish Bank bondholders have given initial support for a debt exchange offer launched by the troubled lender that would require them to share the pain of its rescue.
In a vote held in London on Friday, a majority of subordinated creditors holding the bank’s 2016 bonds, who have been targeted by the bank in the proposed debt exchange, backed resolutions that will allow the tender to go ahead.
EDITOR’S CHOICE
Anglo Irish bondholders face dilemma - Nov-18
Irish rescue hopes lift euro - Nov-19
Brussels blog - Feb-25
By supporting the so-called “notes purchase resolution”, the bondholders have moved closer to backing a deal that would return to investors just 20 per cent of the face value of their debt.
The terms offered to Anglo Irish’s bondholders are being watched closely across Europe for the precedent they may set for future bondholder forfeits in failing banks. Friday’s vote, which comes amid political pressure for bondholders to share the burden of any future bail-outs of eurozone countries, was an important test.
A second meeting of the 2016 bondholders will be held on December 22, at which they will vote on whether to accept the bank’s offer. The two stage process is necessary because of the terms under which the debt was issued.
Friday’s vote was key to the Anglo Irish restructuring plans because it was the vote believed to be most at risk of being blocked by funds opposed to the plans to enforce a deal that would see dissenting bondholders accept just 1 cent for every €1,000 of bonds they hold.
Separately on Friday, holders of the bank’s 2017 bonds - the biggest single issue targeted in the exchange offer - will be the first to vote on whether to actually accept the proposed “haircuts” and the results will be published on Monday. Anglo Irish declined to comment.
The terms of the Anglo Irish offer, believed by some observers to be harsh, has surprised the City and bondholders.
In addition to the 20 per cent offer – which was lower than most had expected – the deal includes a rare “sweeper” clause that means voting for the exchange also counts as a vote to “sweep up” any recalcitrant bondholders. One banker has described the sweeper as “bondholder cannibalism”.
Anglo Irish has taken nearly €30bn in public funds following losses from a property lending spree. The bank’s executives have so far refused to meet bondholders in spite of calls for negotiation, while government officials have threatened to force burden-sharing if the bondholders refuse to back the deal on offer.
