Sellers of default insurance on Anglo Irish Bank may have to pay as much as 25.5 cents on the euro to settle contracts linked to senior debt.

Credit-default swaps traders set final recovery values in auctions yesterday of 74.5 per cent and 76 per cent on the senior bonds, according to Markit Group and Creditex Group. Results varied because of the different maturities of notes being auctioned.

Final values for subordinated debt were set at 18 per cent and 18.5 per cent.

Anglo Irish changed terms on 2017 subordinated bonds, virtually wiping out investors who did not accept an 80 per cent discount on their notes.

Investors can choose not to settle contracts, betting they will get more if losses are imposed on remaining junior notes maturing in 2014 and 2016. – (Bloomberg)