Anglo Irish Bank : Subordinated Debt

Dreaded_Estate · April 1, 2010, 4:06pm

Anyone know what is going on here?

The CDS spread for sub debt is plunging in the secondary market, meaning the price of the bonds are soaring.

Have they announced a very generous buy back, or have there been any indications that there will be no more buy backs.

Anglo Irish Bank Corporation Limited (SUB)
https://ftp.creditma.com/webmovers/images/66.png

Best performing CDS in the market today
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Renting_And_Proud · April 1, 2010, 4:26pm

Why do I smell a rat and get a feeling that certain “insiders” are cleaning up as we speak

jmc · April 1, 2010, 4:51pm

Well they did buy back a big chunk of Tier 1 and 2 at way below par and this somehow “added” 1.8B to their balance sheet. A CDS price of 1400 - 1800 would imply a price way way below par. So maybe another buy back on the way at a price way above that implied by 1400. If it has dropped below 1000 then it must be a very sweet price.

I think we may have another insider cash out event in the offing.

bodyofevidence · April 1, 2010, 7:39pm

something very rotten here

Coles2 · April 1, 2010, 7:48pm

I read it that after Lenny said that subordinated debt would not be guaranteed past september, Anglo is hoovering up it’s own bonds with taxpayers money. Could that be the case?

Dreaded_Estate · April 1, 2010, 8:18pm

The price of the Anglo sub bonds must be up over 20% today.

Still haven’t seen anything on the Anglo website about a sub-debt buy back.

For a move of this size Anglo must either have announced it is buying back the bonds back on very generous terms, or it has let it be known that these bonds will be paid in full until maturity.

Or it could be that someone has got information that something is going to happen and they are cashing in on that knowledge.

Whatever it is, it isn’t good for the taxpayer.

HoardAndSurvive · April 2, 2010, 1:09am

I dont see what the big mystery is. The government announced its going to support Anglo with €19bn, so obviously their bonds will rise in value and their CDS fall.

Dreaded_Estate · April 2, 2010, 12:39pm

Except these are the subordianted bonds. They should be there to absord losses therefore the investors should get nothing back.

From yesterdays price movements it looks like Anglo/state is being very generous to those remaining.

verbatim · April 22, 2010, 1:08pm

Anglo Irish Tier 2 Notes Poised to Profit in Buyback, BofA Says

By Esteban Duarte
April 22 (Bloomberg) – Anglo Irish Bank Corp.’s lower
tier 2 notes are undervalued because the bank is likely to
redeem the debt at a premium, Bank of America Merrill Lynch
analysts said.
Investors should buy Anglo Irish’s lower tier 2 bonds
maturing in June 2016 and June 2017, according to a Bank of
America note to clients today. The notes, currently trading at
about 41 percent of face value, are worth between 54 and 58
percent, according to the report.
Banks that buy back debt at a discount to face value
generate a capital gain they can use to bolster their capital
ratios. Anglo Irish could raise 860 million euros ($1.2 billion)
of core capital by tendering for all its lower tier 2 bonds at
half of face value, assuming all offers were accepted, Bank of
America analysts estimate.
“We believe that Anglo Irish will undertake liability
management in the coming months that will involve its
outstanding lower tier 2 securities,” analysts Richard Thomas
and Samantha Horn wrote. “It needs the capital and the bonds
are trading at a heavy discount.”
Anglo Irish, nationalized in 2009, may need 18.3 billion
euros in new capital to prevent the obliteration of what was
once Ireland’s third-biggest lender, Finance Minister Brian
Lenihan said last month.
Anglo Irish has 2.38 billion euros of lower tier 2 notes
outstanding, according to the report. The securities, which
banks use to cushion against loan losses, are the most senior
type of regulatory capital instruments.

Never bet against the Irish govt shafting it’s citizens is what I think they’re trying to say.