If you have a new account but are having problems posting or verifying your account, please email us on hello@boards.ie for help. Thanks :)

Hello all! Please ensure that you are posting a new thread or question in the appropriate forum. The Feedback forum is overwhelmed with questions that are having to be moved elsewhere. If you need help to verify your account contact hello@boards.ie

Hi there,
There is an issue with role permissions that is being worked on at the moment.
If you are having trouble with access or permissions on regional forums please post here to get access: https://www.boards.ie/discussion/2058365403/you-do-not-have-permission-for-that#latest

Why are the bank of ireland / aib bonds so heavily discounted?

ofjames · 2009-05-19 22:48:58

with regard to the following plan: http://www.irishtimes.com/newspaper/breaking/2009/0519/breaking32.htm Can someone kindly explain why these bonds are trading so far below par? Especially in light of the govt guarantee.

19-05-2009 11:48pm

#1

ofjames

Registered Users, Registered Users 2 Posts: 111 ✭✭

Join Date: March 2008

Posts: 94

with regard to the following plan: http://www.irishtimes.com/newspaper/breaking/2009/0519/breaking32.htm

Can someone kindly explain why these bonds are trading so far below par? Especially in light of the govt guarantee.

0

Comments

#2 20-05-2009 12:15am

Économiste Monétaire

Closed Accounts Posts: 2,208 ✭✭✭

Join Date: March 2008

Posts: 2015

As far as I am aware, they're buying back hybrid bonds and other undated debt (only?). The government guaranteed a specific class of debt, undated subordinated debt not being in that. You don't have to make the coupon payments on hybrid bonds and, yet, it's not considered a default (like dividends on equity). They're pretty low on the totem poll of seniority and the prospect of nationalisation is probably why they're so heavily discounted.

0