Irish govt may face legal action from US hedge funds on bonds-FT

LONDON Dec 2 (Reuters) - The Irish government may face legal action from a group of U.S. hedge funds if it proceeds with plans to inflict losses of up to 100 per cent on 300 million euros ($404 million) worth of subordinated bonds which they hold in the Bank of Ireland, the Financial Times reported on Friday.

The newspaper cited the bondholders, which include Appaloosa Management LP, as saying that the plan was "politically motivated" and could lead to the Bank of Ireland and the Irish state facing higher borrowing costs.

Appaloosa Management LP was not available for immediate comment.

In a submission to the Irish government, which owns a 15 percent stake in the Bank of Ireland, the bondholders say the market would "view with great cynicism" any decision to put the rights of equity holders above more senior ranking creditors, the FT reported.