Sir, – Fintan O'Toole in his column (Opinion, December 17th) correctly highlighted three key bailout truths which can only now be told. I have an interest in the second of these truths – that of the plan to "burn the senior bondholders in Anglo-Irish Bank".
Since 2000 I have been board chairman of an investment fund based in the IFSC. All the investors are EU residents and investment management is delegated to a European fund manager. During the crisis period of 2007-2011 the fund held senior bonds issued by Anglo-Irish Bank and two Icelandic banks attracted by the above-average yields. They were small holdings and represented little over 1 per cent of the fund’s total assets. So a total write-off would have been embarrassing for the investment managers but not serious for the thousands of investors who would be protected by the normal risk-spreading policies.
Because of the explicit guarantee granted by the Irish government in September 2010 the Anglo-Irish bond held a price of around 90 cents whereas the Icelandic bonds fell rapidly to prices of 25 cents and 6 cents respectively, reflecting that country’s decision not to guarantee bondholders.
In due course the Anglo-Irish bond matured on March 2nd, 2011 and was repaid in full. The Icelandic bonds continue to be priced at their distressed prices.
It is now clear that the fund’s investors owe a debt of gratitude not only to Irish taxpayers but also to Jean-Claude Trichet of the European Central Bank who demanded that no bank bondholders should be burned. That decision has cost this country some €7 billion in respect of Anglo-Irish and Irish Nationwide alone, enough to complete the children’s hospital, the LUAS extension and a multitude of other needed projects.
Michael Noonan, thanks for trying to recoup these monies but you and Brian Lenihan were dealing with a Eurocrat with other things on his mind. – Yours, etc,
DAVID McCABE,
Waltham Terrace,
Blackrock,
Co Dublin.