Ireland’s Finance Minister has had to come out and rebuff calls to let Ireland’s troubled Anglo Irish Bank to default on its bondholders.
He has called the prospect of Irish banks defaulting ‘unthinkable’:
Opposition politicians and some media commentators have called on Lenihan to force bondholders in Anglo Irish Bank to take some of the hit for the nationalised lender’s massive losses, which are a major burden on the exchequer.
“It’s unthinkable that Ireland would default on senior debt or that Ireland’s banks would default on senior debt,” Lenihan told Reuters in parliament.
“Ireland is not prepared to be some kind of social experiment for bank default.”
He declined to comment on whether holders of riskier subordinated debt issued by Anglo Irish should be shielded from losses but in a parliamentary committee a senior official signaled a renegotiation of some of the subordinated paper was possible.