I will start this by saying that I don't understand the working of the bond market but here goes:
Using round figures.
Yesterday we repaid an Anglo bond for 1 Billion Euro which was the original redemption value.
It is possible that the bond had changed hands many times since it was originally issued and not always at face value.
So let's say the current owner paid 600 Million for it three years ago.
Could we have bought it last year for 800 Million, thrown it in the bin and saved 200 Million? The holder would make a profit of 200 Million as well?
Can we do this for existing bonds that are in existence?
I am fairly sure there is something flawed in this otherwise I'm in the wrong job
The government, which owns Anglo, could imaginably make policy which would have a great effect on people's expectations of repayment, and thus on the value of the bonds. They could make belligerent sounds about burning the bondholders, greatly reduce the value of the bonds, and buy them up at a massive discount.
That is market manipulation.
As well as being illegal, it would have a huge negative impact on our reputation. Further, those who sold the bonds at a discount might have a good case for compensation in the courts.
If the buyer of the bonds could be identified as the Irish Government/ECB/IMF why can't the owners of the bonds be identified now ...
I think we'd only get away with this once. Once the new "buyer" in the market is identified, that being the Irish Government, I reckon the cost of these bonds would rise...
The identity of the beneficiary of the bond holders is important for transparency....
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