In cash markets Allied Irish's 4.5% 2012 senior issue is around 3 points higher at 85 mid, some 300bps tighter to swaps, while in CDS early quotes are showing the cost of protection on senior debt 250bps tighter to last night's close at around 1400 bp.
This comes in the aftermath of the completion of the transfer (ordered by the Irish High Court on February 8) of EUR12.2bn worth of deposits from Anglo Irish and Irish Nationwide yesterday afternoon.
Anglo Irish transferred EUR8.6bn to Allied Irish, who will also receive senior NAMA bonds with a nominal value of EUR12.2bn. Allied Irish will, in turn, transfer EUR3.5bn to Anglo.
The moves are part of the government winding down Anglo Irish and Irish Nationwide.
The banking sector will continue to be under the spotlight over the weekend as the results of the Irish general election filters through.
The supposition is that the opposition party, Fine Gael, will either win outright or form a coalition, either with Labour or independents. Fine Gael have been keen to focus on burden sharing for senior bondholders throughout their campaign, although whether they will be able to put the idea into practice should they get in is still unknown, with the ECB still vehemently against senior haircuts.
adam.parry@thomsonreuters.com
Keywords: IRISH/BANKS CDS
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