>assuming the debt for equity swap is allowed to go ahead, some...

>assuming the debt for equity swap is allowed to go ahead, some value can be added back over time.

First of all, I reckon there WILL be a transaction.

- the last thing the bankers want is impaired loans on already fragile bank balance sheets. Banks are looking for ways to lend the abundant cash they have - structuring up Basel tier 2 ratable assets over infrastructure fits the bill perfectly.

- impairing the loans will increase the risk rating on loan assets and eliminate any prospect of a Basel tier 2 allocation. This means that fragile bank leverage ratios will be blown away.

Why turn away an opportunity to structure a high margin Basel tier 2 capital asset when the alternative is a high risk impaired asset.

The Banks want this business to survive.

I reckon the BNBG holders will be untouched by the debt to equity transaction.

- The BNBG's represent cheap capital, given the risk. The margin over the BBSW is much less than anything that the market would currently offer (and is completely subordinated). Logic dictates - keep the facility in place - pay the interest; don't put any more new capital in than you have to.

- Convert only the corporate debt to equity (recourse debt already has asset guarantees - why change it?). The current negative equity state would mean you get to crystalise existing shareholder losses and the banks get to pocket all the future gains from unwinding the mark to market assets off a low base.

- Run the BNBG's to full term allowing this cheap money to be used in holding prime assets until the market price is right.

Pulling the pin on BNB would likely put extreme pressure on all the satellites. This would, in turn, amplify the asset impairment (bank loan) issue, detailed above.

The bankers will do what their own self interest leads them to do. BNBG holders simply need to understand the banker logic to derive some comfort from their present situation.