THE NATIONAL Treasury Management Agency moved to reassure senior and subordinated bondholders in Allied Irish Banks and Bank of Ireland that their investments would be honoured.

The agency, which manages the State’s debt, took the unusual step of issuing a statement clarifying the Government’s position on the repayment of bank debt.

The agency said in a statement that Minister for Finance Brian Lenihan had no plans to impose losses on senior bondholders in any credit institution in the State through any legislative measures.

The statement came a day after Financial Regulator Matthew Elderfield said the possibility of a deal being done with senior bondholders at Anglo Irish Bank and Irish Nationwide Building to share losses had not been ruled out.

It was made to rule out any mounting speculation that senior bondholders could eventually be forced to share in bank losses.

Last week, Mr Lenihan said he expected subordinated bondholders at Anglo and Irish Nationwide to make “a significant contribution” to losses of up to €39.7 billion. Yesterday, the agency sought to reassure bondholders in a statement indicating that AIB and Bank of Ireland would not be affected.

The agency said the Minister had advised that “prospective resolution and reorganisation legislation, insofar as it affects subordinated debt in issue, will apply only to such debt in issue from institutions which are not listed on a recognised stock exchange, are in 100 per cent State control and cannot survive in the absence of total State support”.

Concerns about AIB’s subordinated debt were raised by investors since the Minister’s announcement on the subordinated debt at Anglo and Irish Nationwide, and the decision to take the bank into majority State ownership.

The value of this debt on the bond markets has fallen in recent weeks. It traded at 100 cent in the euro two weeks ago, but fell to 88 yesterday morning before rising to 92 after the agency’s statement.