Advertisement

We need your help now

Support from readers like you keeps The Journal open.

You are visiting us because we have something you value. Independent, unbiased news that tells the truth. Advertising revenue goes some way to support our mission, but this year it has not been enough.

If you've seen value in our reporting, please contribute what you can, so we can continue to produce accurate and meaningful journalism. For everyone who needs it.

Mark Stedman/Photocall Ireland
Bondholders

AIB announce junior bondholder burden-sharing scheme

Minister Noonan says AIB’s plan is the last chance to ensure appropriate burden-sharing by the bank’s bondholders.

AIB HAS ANNOUNCED a new plan which could see its junior bondholders bear some of the bank’s debt burden and lose up to 90 per cent of their investment.

In a statement released yesterday, the bank said it plans to launch an “offer to buyback outstanding securities” at rates which are 75 per cent less than the bondholders initially paid – and 90 per cent less for subordinated bonds.

Minister for Finance Michael Noonan said that this was the “final market-based step to ensuring appropriate burden-sharing by subordinated bondholders” in the bank and the terms being offered by AIB were of the “minimum acceptable”.

“The proposed LME offers those investors the final opportunity of a market based exit at a return which is reasonable and fair considering the level of Government support to date,” Noonan said in a statement.

AIB says that two bondholders have launched a legal challenge to burden-sharing, which the High Court will hear on 2 June.

Noonan previously claimed the challenges were “entirely unfounded”. The Department of Finance said in a statement that the court ruling would “in way deter the government from achieving appropriate burden-sharing” levels with bank bondholders.