Subordinated debt holders in Anglo Irish Bank are being invited to exchange their exiting debt for new debt at a ratio of 0.2. That means they will get 20 cents on the dollar (or euro, I guess in this case…) for their existing debt.
Markets had expected a junior debt holders to take a hit, so reaction may be modest. If senior debt holders take haircuts, the reaction will be much more negative because the senior debt is backed by the Irish government. The notional amount is pretty small, at EUR 1.6 bln.
EUR//USD is easing, now at 1.3968.
