Free money and more free money

Karl Whelan at Irish Economy -- On Monday, January 31st, Anglo Irish Bank are going to pay out on a maturing bond worth €750 million. (For reference, the total cut in this year’s welfare budget will be €873 million.) The investors who purchased this bond invested their money with Anglo on the 17th of January 2006. The bond is senior unsecured debt and is not covered by a state guarantee.

With some tedious trawling through German financial information websites (apparently reflecting that many holders of this bond are German), we've gotten a price chart for the bond. It appears that even quite recently, and at various times over the life of this bond, holders expected sizable losses on it (in the range of 10-15 percent of principal).

As Karl indicates, it's a tad insane to be paying out on bonds in an insolvent bank. And so its an additional level of puzzlement to pay out in full on such a bond when even the beloved "markets" don't expect that.