# What exactly are subordinated bonds?



## EileenH (31 May 2011)

I'm trying to find out if my brother-in-law's ICS bonds will be affected by the problems of B of I subordinated bonds today. Does anyone know?

I apologise if this is in the wrong forum.


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## iscritto (31 May 2011)

http://financial-dictionary.thefreedictionary.com/Subordinated+Bonds


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## Brendan Burgess (31 May 2011)

Very unlikely. 

They are usually bought by institutions in very large denominations. 

Bank of Ireland were selling them to their customers some time ago. What yield/interest rate was he promised? If it was around 12% , then he probably has them.

Brendan


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## The_Banker (1 Jun 2011)

Brendan Burgess said:


> Very unlikely.
> 
> *They are usually bought by institutions in very large denominations. *
> 
> ...


 
Based on that Brendan could these subordinated bonds have been purchased by Credit Unions? 

If they were and now the Credit Unions are going to suffer 80% to 90% losses on them will this not cause further issues for the tax payers as the government will need to bail out individual Credit Unions?


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## CUJimmy (2 Jun 2011)

Yes Credit unions do hold subordinated bonds and a number have had serious write downs on AIB BOI and Anglo bonds. However yesterday IL&P made an offer of 8 cent on a bond that was purchased for credit unions in a settlement with Davy over the sale of perpetual bonds in 2008. This bond is held by over 100 credit unions and losses are estimated in excess of € 30 million


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## SteveBliss13 (20 Jun 2011)

Hey Brenden, you remember when the bank of Ireland was selling them? I remember that as well but I cannot for the life of me remember the time frame.


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## tvman (21 Jun 2011)

Brendan Burgess said:


> Very unlikely.
> 
> They are usually bought by institutions in very large denominations.
> 
> ...



Brendan 

was it their own subordinated bonds BOI were selling to their customers? Any more details - if they were selling them to retail customers and didn't give very strong health warnings that sounds highly unethical (and actionable?)


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