Professor Alan Ahearne:

I think the Minister certainly considered it, but as September went on, and our interest rates on, facing the State, on sovereign bond markets increased, then he became worried about the knock-on effects to the sovereign.

And the advice, clearly, from the NTMA was "Don't do this because it will push up your yields even more and you'll lose access to the markets and if you are pushing up the Irish interest rates as a heavier cost to the State and, therefore, any gain you are going to get you are going to lose". I mean, I was ... I remember he did an interview in New York in early October, maybe about 10 or 11 October, with, I think, the Financial Times, and I was sitting beside him and he said to them ... they asked him about the Anglo bonds and he said "Well, I'm not going to coercively discount them but the bank could do a liability management exercise and raise some capital that way, burn 'em that way. That's a voluntary ...". In fact, most of the subordinated debt that Deputy McGrath spoke of was done that way, done through voluntary ... a voluntary way. Not long after, I remember somebody from the NTMA - a senior official from the NTMA - showing me their BlackBerry and saying "Look at this, I'm getting e-mails from ... here's a headline, I think, from the Financial Timesor from somebody, something like Ireland going to default". It was that sort of tone to it - "Look at this, I'm getting e-mails from the people we sell bonds to asking me is Ireland about to default". And I said, "Well, he didn't ... the Minister didn't mention anything about sovereign bonds, he was talking about bank bonds", and the reply I got was "It doesn't matter, look at the headline, this is creating problems". And the Minister said ... I remember the Minister saying afterwards "Okay, I realise I'm talking about burning senior debt and you're [the NTMA are] trying to issue senior deb". So, they're different debts but very difficult to do in an environment where the sovereign market is stressed.