It is an interesting dynamic situation.
The banks may have some advantage in terms that their debt ranks higher than the subordinated BNBG debt. However, the BNBG holders have some interesting preemptive rights in the restructure context. (There are even some legal dimensions to all of this that should make the banks "play nice").
I am unaware that the BNBG trustee has been invited to the banking consortium meetings. If the banks have dirty deeds afoot against the BNBG holders interest - they can expect one huge fight. If they have more reasonable plans - the trustee should be involved, now! (... and would have an obligation to disclose this involvement).
Hence, I think that involving BNBG holders in the restructure is simply too complex. (Good god, a consortium of international bankers would be hard enough).
Hence, I think some deal with the BNB corporate debt, for BNB equity is the deal on the table. I think the banks can see the profitable upside in this - carving out separate and distinct equity positions for infrastructure assets, over a period of time - after repayment of BNBG debt.
Last thing banks need is defaulted debt in their list of assets. This is the stuff that kills banks.
If given the choice of a viable risk/reward or certain death ... which would you choose?
/disclosure: BNBG holder - no BNB
BNB
babcock & brown limited
