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Debt Buy Back Exercises in Irish Banks

July 7, 2011

It is reported that Allied Irish Bank has announced a high level of participation in the bank’s Liability Management Exercise, in which it proposed to buy back 18 subordinated bonds from lenders at a discount of between 75% and 90%.

A high number of lenders on 15 subordinated bonds have reportedly agreed to take part in the exercise. Cayman-registered Aurelius Capital Management had taken a High Court legal action against the State to challenge the Subordinated Liabilities Order secured on 14 April, under which the Minister for Finance was empowered to alter the terms of certain of the banks subordinated bonds and lift restrictions on buy backs. Justice John Cooke had earlier ruled that the challenge taken by Aurelius only applied to 2 of the subordinated bonds and on Friday last made an Order striking out the proceedings on consent. Justice Cooke has also lifted his Order of 24 June suspending an interest payment worth in the region of £21 million which was due to be paid on June 25th, pending the outcome of the Aurelius case. It is also reported that Bank of Ireland have removed one of its bonds from a similar debt buy back offer in response to a threatened legal action in which a UK pensioner was to bring a test case before London’s High Court. 


Contributed by Brendan Cahill.