Monday September 27 2010
OFFICIALS are still warning Finance Minister Brian Lenihan on the dangers of any attempt to re-negotiate terms with lenders to Anglo Irish Bank -- who could have a call on the bank's assets if they are not repaid.
The officials fear that even talking to holders of "senior debt", who are among the first to be entitled to their money back in the event of a bank failure, could increase speculation about a default -- where guaranteed debts are not repaid.
However, the Government is expected to approve a deal with holders of junior debt, who could lose everything if Anglo was wound down with only its own assets to pay its debts. They are already getting as little as 20 cent in the euro by selling Anglo junior debt on the market.
Yesterday, opposition politicians reacted to a report in 'The Sunday Times' on negotiation plans by saying the Government was embarked on a U-turn in its guarantee of lenders who hold Anglo Irish bonds.
The report said Mr Lenihan would sanction talks with senior bondholders who hold €4bn of the €14bn in senior Anglo debt and whose guarantee expires this week.
