AIB result leaves Irish bondholders in the dark

Author: Gemma Varriale | Published: 8 Jul 2011

Aurelius Capital Management’s 'amicable resolution’ with the Irish government in a dispute over the state’s buyback scheme has left the market with no more clarity than before the outcome.

It was announced on July 1 that Aurelius had withdrawn its challenge of a new financial law that the Irish government is using to impose losses of up to 90% on subordinated bondholders in Bank of Ireland, EBS Building Society and Irish Life and Permanent.

Aurelius had argued that the High Court Subordinated Liability Order was part of what it called an unlawful final solution. The company also claimed that the government was trying to "super capitalise" the bank "way out of all proportions".

The order sanctions...