Dexia Bondholders Avoid Irish Fate

Holders of a junior-ranking Dexia bond are escaping the rough treatment meted out to bondholders of low-ranking Irish bank notes after Dexia Bank Belgium announced it would buy back a deeply subordinated issue at 25% of par, Reuters reported. While the tender price set by Dexia Banque Belgium may appear less generous than what other European banks have recently offered for their subordinated debt, it is more generous than what subordinated debt holders of Irish bank paper were offered in 2010/2011. Dexia was bailed out by French, Belgium and Luxembourg taxpayers at huge expense at the end of 2011. The governments agreed to provide EUR90bn of guarantees to enable the remaining entities to fund their businesses. After pouring EUR64bn of state funds into nationalising large swathes of the banking sector, Dublin came under political pressure to ensure creditors shared the pain, and forced losses of around 90% on junior debt holders at most of its lenders. Read more.