The International Swaps and Derivatives Association (ISDA) was asked today if a failure to pay credit event has occurred at AIB after it ruled last week that a restructuring event took place.
AIB had said it did not intend to pay the coupon on a Lower Tier 2 note which was due on June 5 and had a 15-day grace period, likely triggering the request which was submitted anonymously as a 'general interest question'.
The bank raised €1.6 billion in capital last week when the vast majority of its junior bondholders opted for large losses on their holdings rather than risk a state-imposed wipeout.
The ISDA had ruled that the restructuring event happened on June 9 when AIB suspended interest payments and extended the maturities of most of its outstanding junior debt ahead of the buyback.
A credit event is financial industry jargon for default on payment, breach of bond covenants or other event that casts doubt on an issuer's ability to service its debt.
If the ISDA accept the latest request, a committee of mostly dealers and some non-dealer organisations will meet to decide if a credit event has taken place or not.
