Who, exactly, are the holders of Irish senior bonds?

[Brendan Burgess]

Donal Donovan, in this Irish Times article, [broken link removed] says:

Not all of the bondholders are speculative types from abroad.
Unfortunately details on the institutional composition of the bondholder category have not been made available publicly, probably because of data problems and confidentiality reasons. However, as pointed out by Antoin Murphy of TCD, there is reason to believe that Irish institutions, such as pension funds, represent a significant component. There is thus a clear risk that with a default operation we could end up partly shooting ourselves in the foot.

I was of the view that we should not have guaranteed the deposits of the Irish banks. However, it was argued that letting the depositors go would not the save the country as a whole anything. It would just distribute the burden differently but result in a collapsed banking system as well.

By guaranteeing the depositors, we passed on the cost from one group of Irish citizens to another group but did not affect the overall wealth of the country.

I think that this is really a key point. If we burn the senior bondhoders and the depositors, to what extent are we burning ourselves?

 

[Chris]

By guaranteeing the depositors, we passed on the cost from one group of Irish citizens to another group but did not affect the overall wealth of the country.

For this to be true the banks' debts would have to be owed predominantly to Irish people. But Ireland did not become indebted to foreigners to the tune of over $2 trillion by owing money to its own people. (http://en.wikipedia.org/wiki/List_of_countries_by_external_debt)
This means that a lot of the cost and most of the risk has been transferred from foreign bond holders to the taxpayers of Ireland, and therefore is and will continue to result in an overall negative effect on the wealth of Ireland.

I think that this is really a key point. If we burn the senior bondhoders and the depositors, to what extent are we burning ourselves?

Burning depositors would probably burn a lot of people living here, but I'm not so convinced of the same being the case for bond holders.
This link has been posted before. It is specific to Anglo, but I can't think of a reason that it would be a significantly different list for other Irish banks.
[broken link removed]

 

[Sunny]

There is no way to know who the bondholders are because bonds are traded on primary andsecondary markets on an over the counter basis and not through an exchange. The majority of bonds are held by foreign investors but there is significant amount held by domestic pension funds, insurance companies, Irish banks, Credit Unions etc etc. Probably not enough to justify 'not defaulting' but certainly enough to make one consider the consequences. I know credit unions in particular have denied that they are overly exposed but I used to deal with some them and they were big buyers.

 

[Shawady]

Sunny, would the government know at this stage who the senior bondholders are in the nationalised banks?

 

[Sunny]

Sunny, would the government know at this stage who the senior bondholders are in the nationalised banks?

Not really. I could go out tomorrow and buy an Anglo bond from JPMorgan or another investment bank and there is no way that they would know. They might have a very rough idea but there would be no definitive list.