THE STATE is due to repay over €700 million ($1 billion) on an unsecured five-year Anglo Irish Bank bond today to unidentified bondholders.
In an opinion piece in today’s Irish Times, Taoiseach Enda Kenny said that while he shares the public’s “dismay at the cost and unfairness of this policy and the delay it caused to the state’s recovery”, Ireland’s agreement with the EU-IMF troika means that the government cannot allow any Irish bank to default on its debts.
A further €2.6 billion remains to be repaid on unsecured Anglo debt, just under half of which is due to be paid in January 2012.
Kenny also said that he believes the potential negative effects of a bond default outweighs any benefits, writing: ”potential gains to Irish taxpayers from forcing the bank to default on these bonds, while not insignificant, do not justify the enormous risks from such a course of action”.
The Taoiseach said that the government strategy is growth, not default, and if default were pursued or permitted, it would cut Ireland off from further international finance and set back its economic recovery.
Speaking on RTÉ’s Morning Ireland this morning, Anglo chief chairman Alan Dukes said it was unclear if troika funding would be pulled from other Irish banks if Anglo failed to repay its debt.
He also said that bondholders who bought over the bonds at a discount after they had been issued stand to make a substantial profit in today’s pay-out.
However, objections to the debt repayment have been raised: yesterday, a group of protesters from the Ballhea Bondholder Bailout group caused traffic chaos with a human roadblock as part of a demonstration against the today’s payment.
In a column for TheJournal.ie today, Independent TD Stephen Donnelly argues that there are three reasons we should not repay the debt: it’s not our debt; it’s not required under the EU-IMF agreement; and instead of rewarding us for paying the bill, the markets will punish us.
Fianna Fáil and Sinn Féin have called on the government not to repay the debt, while Independent TD Mick Wallace questioned the logic of making such a payment, pointing out that the bank is no longer operating as a bank.
In a poll published on TheJournal.ie yesterday asking if we should repay the unsecured Anglo bond, 60 per cent said it shouldn’t be repaid at all and 28 per cent said we should seek a better deal on the repayment. Eight per cent (at the time of writing) said it should be paid.