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Ireland Debt Swaps Soar on Anglo Bond Standoff: Credit Markets

The cost of insuring against a default on Ireland’s debt surged to the highest in a month as Anglo Irish Bank Corp. note holders headed for a showdown with the nation’s government.

Creditors holding a “blocking position” of Anglo Irish subordinated bonds plan to oppose a debt exchange worth 20 percent of their 1.6 billion euros ($2.2 billion) of securities, adviser Houlihan Lokey said in a statement today. The government has said it will legislate to allow it to impose penalties on subordinated creditors while making senior investors whole, while the bank’s chairman, Alan Dukes, said today he won’t negotiate with junior bondholders opposing the exchange.