This is a link to the EC statement on its burden sharing policy (see page 8):
The EC is introducing a dangerous caveat to the payment of bond interest. If the firm receives state aid, as many have done during this crisis, then the company needs to make enough profit to pay the junior debt holders, notwithstanding that the firms are otherwise solvent and are capable of paying their debts. This is being done by virtue of a government fiat of a social policy after receipt of the aid. This policy could easily permanently damage these firms in the eyes of many including myself. Making a profit in a quarter is not a condition precedent to paying a quarterly bond payment!
This is a summary from Bloomberg about CreditSights view of the matter, which I just read tonight:
Bloomberg.com This last story indicates that the discussions between the EC and 17 financial institutions are just beginning. An ING spokesman said that ING would notify the market if it did not intend to make payments, and it had not given such notice. The EC will be looking at each bank using a number of criteria. Creditsights used the words "enforced deferrals" to describe the EC's power, which is the strongest reference to the scope of the EC's power on this matter that I have to seen to date. So, I am still not clear how much power the EC has on this issue.
This is a link to some of my posts on the subject within the past few days:
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