Irish election result 'could derail recovery'

The new Irish government could hit holders of bank debt with serious ‘haircuts', drying up bank funding and even derailing the European economic recovery, bond managers have warned.

Voters in the Republic of Ireland went to the polls on Friday for the first general election since the collapse of the banking system. Despite a record victory for Fine Gael, the party fell just short of the votes needed to form a single party majority government, and is expected to form a coalition with Labour. The new government may force holders of senior debt to absorb the losses of weak banks in the form of a ‘haircut' or ‘bail-in'. OMAM's portfolio manager Stephen Snowden, and Ignis' head of credit portfolio management Chris Bowie suggest how Ireland renegotiates the terms of it...