Saturday, March 10, 2012

Ireland faces up to English Law being necessary for future bonds.

One effect of the Greek default is already being taken on board across the Irish Sea, as may be noted in the final paragraph of this item from the Irish Times, linked here:
Another likely consequence of the Greek fiasco for Ireland relates to the legal jurisdiction under which the State will issue debt in the future. As part of Greeceā€™s restructuring, the new bonds issued to its loss-suffering creditors are ruled by English law, not Greek law. That is good for investors, as it protects them from an act of the Greek parliament designed to unilaterally reduce their claims in the future. But it is bad for Greece because it limits its freedom of action. Most outstanding Irish Government debt is issued under Irish law. Given all that has happened, it seems unlikely in the future that foreign investors will be willing to expose themselves to Irish Government debt, the terms of which are subject to change by an act of the Oireachtas. When the Government eventually returns to the bond market, the bonds its offers may well be subject to English law.

Labels: ,


Post a Comment

<< Home