why doesn't bnb buy back its bnbg's?, page-7

Thanks for your thoughts Dargie. I think you are probably right, It'll be less up to any regulator saying anything on behalf of retail investors and more to do with how important the relationships are/were for the banks who distributed the BNBG notes or whether there was any misrepresentation when they were being sold.

I didn't buy them in the primary offer and only bought my first a couple of weeks ago so I know I am not in that camp anyway.

I agree with your thoughts about a reduction in capital in the order of 50%.

I think that the outcome moved from binary; Fail/Not Fail last week with the bank injection of $150mm to a question of recovery value for debt holders (and by extension equity holders). By putting in extra money due back in December 2009 the banks have effectively said they are going to keep BNB alive and sell down the assets in an orderly manner until there is nothing left of the debt or the company whichever comes first.

The BNBG notes are subordinated but have conversion rights in November 2010 which, if the company survives, could be very diluting for equity holders and for banks who take some sort of debt for equity swap, as the BNBG notes convert at a price average on the $100 face amount not any prearranged % or on current market price. So if they exchanged today for example at the 25cent market price each BNBG note at $100 would convert to 400 shares (and I believe there is up to $600mm notes out there or 6 times the current market cap).

Anyway thinking that subordination on the BNBG is bad, conversion features and formula on them is good, fact that it is held by retail is good and recovery rates on them should be OK, 50% + interest seems a fair guess in a couple of years or 10-12 times todays price.