BOI bring €2bn govt. bank bond to the market … king26.htm

I’m going to have to show my ignorance here - what do readers think their motive is for this bond-issue? I’m no financial expert but I’m going to give it a go anyway…the bonds are rated AAA from S&P so presumably consumers would be interested in these straitened times in something thats AAA-rated (for what thats worth anymore). So presumably it’ll mean influx of cash. Which should promote confidence.

But on the other hand it does tend to make BoI into fools when they’ve been saying they’ve got tonnes of money and they’re solvent as can be and so forth. But they wouldn’t be issuing those bonds if they didn’t need the money. Would they?

But on the third hand the market is already aware of this (which is why the arse dropped out of BoI shares) so…I’m not sure what may or may not tell us about the current state-of-play down at BoI.

contrasting story that PE will be taking a stake too?
this is weird… … 52724.html

AAA is because of the Govt. Guarantee, it will still be in place at the point of maturity.

BOI being liars, they can’t trade insolvent, it’s illegal, that would require collusion of many parties including independent actuaries etc. I would say that they are solvent enough to stay open but not to start lending again, they are also trying to raise core tier1 capital to the new bulletproof standard of 10%, they may want the bond for that reason alone? It’s anybody’s guess.

oh indeed yes - the article makes that clear enough. Theres no way this would be AAA-rated if it wasn’t government-backed.

lord knows the article doesn’t speculate as to their reasons. And you would think that the bank would issue a statement giving some sort of reason why they’re doing this bond-issue at this time. Correct me if I’m wrong but this is a fairly large bond-issue isn’t it? And business doens’t usually issue bonds without some sort of reason do they?

One of the things that really pisses me off about the banks is that they had not a clue about needng cash all the way down to the point where their Market Cap was virtually nothing.

When BofI was down to €7 or €8 this €2bn would have represented a quarter of the value of the company. Now it represents twice the value of the company.

Even when they knew their, not having a clue, was destroying the market cap of the company they persisted.

Let’s say a bank ends up having to give up equity in return for cash from a new investor. There’s a huge difference between tapping new investors when you’re share price is €5 as compared with tapping them when you’re on the rack and selling for €1. You have to give away five times as much of your company or more for the same amount of cash.


*Dears, im gona stay out. I believe the banks are over staffed. There are too two many of them for a tiny island with 4 million people and only about 850,000 paying taxes. BofI are over exposed to the property market in the UK and the uk is not looking good - too much borrowing. Stay out of Bank shares for another 2 years. The worst is yet to come :nin . They have not reduced their staff or marked down their ‘true’ :blush: Liabilities. Don’t see much business at the counters of Banks, at this point in time. They are very very quiet. 8DD They have not faced reality yet. BD And as far as they being 'Centres of Excellence’ Par Excellence this is farcical XD * Keep a 1000 miles away from the Banks. :angry:

This issuance is just run of the mill refinancing. BoI have 4 billion of bonds maturing before the end of the year. They’re just shifting short term liabilities to a longer maturity. Seems like normal bank financing activity to me.

I believe Eddie Hobbs was saying something similar this afternoon on Radio 1. But I’ve seen other posters on here posit that the market has already punished BoI for not marking down their true liabilities. That in fact if they’d been honest-and-true managers they would have already marked it down and the share price would have taken a hit but not as bad. But because BoI have tried to pretend that everything is okay that the market reckons they’re asleep at the wheel and have piled out of the Irish banks which is why the share price has taken such an *heroic *beating

oh. So no conspiricy theory here then eh? How disappointing. I love a good conspiricy theory so I do :slight_smile:. Well - you heard the man - remove your tinfoil hats and return to your homes and loved ones.