I was wondering if anyone here could explain in laymans terms what this means to ordinary folk with deposits in AIB?
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(Reuters) - The International Swaps and Derivatives Association (ISDA) has accepted a request to examine whether a restructuring credit event has occurred with respect to Allied Irish Banks, the ISDA said on Friday.
A credit event is financial industry jargon for default on payment, breach of bond covenants or other event that casts doubt on an issuer's ability to service its debt.
The derivatives industry body has the final say on whether a credit event has occurred, a ruling that would trigger the payout of CDS -- a popular financial tool used to hedge risk and speculate on changes in the likelihood of default.
The request comes as the Irish government is hoping to cut around 5 billion euros ($7.3 billion) from a 70 billion euros bill for bailing out its banking sector by imposing losses of up to 90 percent on junior bonds in AIB, Bank of Ireland , Irish Life & Permanent and EBS Building Society.
The request was submitted anonymously as a "general interest question", according to the ISDA's website.
A similar request with respect to Allied Irish Banks -- which is 93.5 percent state-owned -- was made by UBS AG in April but later withdrawn.
The ISDA has received a total of eight requests regarding credit events this year.
Dublin is currently involved in a court case with a junior bondholder in Allied Irish banks. The New York-based investment firm Aurelius Capital Management said this week that attempts to impose losses on it were not enforceable because they violate a key European Union directive.
[broken link removed]
(Reuters) - The International Swaps and Derivatives Association (ISDA) has accepted a request to examine whether a restructuring credit event has occurred with respect to Allied Irish Banks, the ISDA said on Friday.
A credit event is financial industry jargon for default on payment, breach of bond covenants or other event that casts doubt on an issuer's ability to service its debt.
The derivatives industry body has the final say on whether a credit event has occurred, a ruling that would trigger the payout of CDS -- a popular financial tool used to hedge risk and speculate on changes in the likelihood of default.
The request comes as the Irish government is hoping to cut around 5 billion euros ($7.3 billion) from a 70 billion euros bill for bailing out its banking sector by imposing losses of up to 90 percent on junior bonds in AIB, Bank of Ireland , Irish Life & Permanent and EBS Building Society.
The request was submitted anonymously as a "general interest question", according to the ISDA's website.
A similar request with respect to Allied Irish Banks -- which is 93.5 percent state-owned -- was made by UBS AG in April but later withdrawn.
The ISDA has received a total of eight requests regarding credit events this year.
Dublin is currently involved in a court case with a junior bondholder in Allied Irish banks. The New York-based investment firm Aurelius Capital Management said this week that attempts to impose losses on it were not enforceable because they violate a key European Union directive.