AN Post Bonds - Are they safe

[hand_m]

Are An Post Bonds safe.? I understand they are Government guanteed, but what is the situation if the Irish Government got into trouble like Greece and actually defaulted.? It may be unlikely but is your money still safe in that scenario.?

 

[jpd]

Not definitely - if the Irish Government defaults on its debts (An Post savings are a loan to the Gov't) it might not necessarily default on all of its debts but who knows - they are hardly going to say that they might default !

 

[jhegarty]

I don't think An Post has any exposure to the mortgage market like the banks do.

They are government guarantee, but as long as An Post are solvent you don't need to worry about the guarantee.

 

[Padraigb]

If the government defaults, then things are so bad that losing your savings might be the least of your concerns.

 

[sunrock]

The government won`t default and the last thing they would do is to default to people with their savings in An Post. People must realise what powerful tools the government has in its arsenal.Even if the governments 500million weeky borrowing to cover their excess spending over taxation receipts was cut off by the international lenders ,the government could sort it by increasing taxes and slashing spending.They could introduce property taxes, slash welfare etc etc...all not very popular but if the money isn`t there people will just have to accept it. Raiding the savings of An Post would be pointless as the government has the use of this money anyway.

 

[trekkypj]

Even if they did default on the interest, or indeed on paying out the face value of the bonds themselves, the debt would still be due. In order to ever borrow money again, they would at some point have to honour the existing debt. Whatever about international debt holders, domestic investors in An Post savings bonds and certificates would have to be paid.

Otherwise, Ireland.Inc would be unable to borrow. Too great a risk. They'll think to themselves - if they won't pay their own taxpayers and citizens back, I'm not going to be paid back. So they are not going to lend to them either.

Countries have tried renouncing debt before - I read somewhere (correct me if I'm hazy on the detail) that the Soviet Union renounced the debts of Tzarist Russia, bonds in particular, but found that it had to pay at least some of the debt back in order to get access to the international credit markets.

I consider it unlikely in the extreme that Ireland would default on any of its bond committments, to be perfectly honest. Bad and all as things are, they're just not THAT bad.

But even if it did happen in some doomsday scenario, at some point to effect any kind of recovery, they would have to pay back some if not all of the outstanding debts which they defaulted on. So in that highly improbable scenario, at some point you would see a return.