236 lines
6.1 KiB
Plaintext
Executable File
236 lines
6.1 KiB
Plaintext
Executable File
finance
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financialcrisis
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8182703
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-----
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# Allied Irish Bank bondholders to sue Irish government
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## Bondholders in Allied Irish Bank are preparing to sue the Irish state over
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losses they expect to be forced to take, in a move that may imperil attempts
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by the government to raise fresh funds next year.
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![][1]
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By Harry Wilson 6:15AM GMT 06 Dec 2010
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[Comments][2]
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The investors, who include some of the world's largest fixed-income pension
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and insurance funds, held talks on Friday about taking the Irish government to
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court if it forces a second round of "haircuts" on the value of subordinated
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debt issued by Allied Irish.
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Anglo Irish Bank and Irish Nationwide have already been the subject of legal
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action from subordinated debt investors, but so far without success.
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What makes the latest bondholder group's action particularly significant is
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that it is dominated by "long-only" investors and not so-called "speculators"
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like hedge funds. Investors' anger may prompt fears of a "buyers' strike" when
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Ireland, and other indebted euro area countries, come to the market next year
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to refinance hundreds of billions of euros of maturing sovereign debt.
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"These are the pension funds, insurers and main fixed-income funds that are
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the backbone of the bond market," said one source. "Many of these funds are
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not going to want to touch Irish paper for a long-time. I hope governments
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realise they are angering precisely the people they are going to need to
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convince to buy new bonds."
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Law firm Bingham McCutchen is understood to be organising the group and hosted
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a conference call on Friday for Allied Irish investors that wish to take legal
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action. Bingham also advised Irish Nationwide subordinated bondholders.
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## Related Articles
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* [Firewall needed as eurozone stands on brink of meltdown][3]
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06 Dec 2010
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* [Eurozone crisis, austerity cuts to hit UK growth][4]
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05 Dec 2010
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* [Belgium favours bigger eurozone rescue fund][5]
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04 Dec 2010
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* [ECB helps stop the rot in Europe for now][6]
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04 Dec 2010
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* [US jobs market woe dampens optimism][7]
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03 Dec 2010
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* [ECB bows to German veto on bond purchases][8]
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02 Dec 2010
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In June 2009, holders of Tier 1 and Tier 2 bonds in Allied Irish accepted a
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new issue of lower Tier 2 debt as part of an exchange offer that saw investors
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lose 33pc to 50pc of the face value of their investment. The latest threat of
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"haircuts" has enraged holders, given the repeated assurances from Irish and
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European authorities over the financial strength of Allied Irish.
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Unlike Anglo Irish and Irish Nationwide, Allied Irish was subject to the
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European bank stress tests. Allied Irish passed, but after last month's €85bn
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(£72bn) bailout, it is expected to be almost completely nationalised, with
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creditors set to take more of the pain.
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"These investors are not bad guys, they are people that have already accepted
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substantial reductions in their investments. The simple fact is the risk
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return equation for many investors has now turned in favour of legal action,"
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said the source.
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Like previous investor action groups, one major point of law at stake will be
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the legality of forcing haircuts on lower Tier 2 debt while still paying
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coupons on senior debt. Under the terms of the subordinated debt, interest
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payments on senior debt must have ceased before the subordinated debt can be
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restructured.
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[What are these?][10]
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* Share: [Share][9] [ ][11] [ ][12]
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[Tweet][13]
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http://www.telegraph.co.uk/finance/financialcrisis/8182703/Allied-Irish-Bank-
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bondholders-to-sue-Irish-government.html
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Telegraph
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## [Financial Crisis][14]
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* ### [Finance »][15]
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* ### [News by Sector »][16]
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* ### [Banks and Finance »][17]
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* ### [Business Latest News »][18]
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In finance
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[![Truncheon-wielding police in Barcelona have clashed with protesters at a
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makeshift camp that is one of dozens erected in Spain to protest at high
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unemployment][19] ][20]
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### [Spanish anti-crisis protests][20]
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[![Thousands of protesters occupy Puerta del Sol square in Madrid][21] ][22]
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### [Huge protests in Madrid][22]
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[![Riot police use tear gas as protesters throw petrol bombs in Athens][23]
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][24]
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### [Tear gas and petrol bombs][24]
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[![Irish bank stress tests: the key points][25] ][26]
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### [Irish bank stress tests: key points][26]
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[![Q&A: What is the Independent Commission on Banking?][27] ][28]
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### [Q&A: What is the Independent Commission on Banking?][28]
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[X][9] Share & bookmark
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Digg Fark LinkedIn Google Buzz StumbleUpon Y! Buzz
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[What are these?][10]
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Share:
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* [ ][9]
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* [ ][11]
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* [ ][12]
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* [Tweet][13]
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* Advertisement
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![][29]
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telegraphuk
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Please enable JavaScript to view the [comments powered by Disqus.][30] [blog
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comments powered by Disqus][31]
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[![][32]][33]
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Advertisement
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sponsored features
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