AIB plans to return to the subordinated bond market for the first time since the financial crisis as it prepares to start repaying its €21 billion bailout by the year end.
This is according to people with knowledge of the matter.
Bloomberg news agency said the sources indicated that AIB is seeking to redeem €1.5-2 billion of the state’s holdings of €3.5 billion of preferred stock in the bank, with the remainder converting to equity.
To help fund the deal and maintain capital levels, the lender may sell Tier 2 bonds and Additional Tier 1 notes, the people said, declining to give amounts involved.
The blueprint is subject to market conditions and final approval from the European Central Bank’s supervisory unit, which is expected by the middle of November, said one of the people.
An announcement on the plan could be made immediately afterward, they said.
The news agency said that holders of AIB’s junior bonds lost €5 billion from 2009 to 2011 as the lender collapsed under the weight of soured property loans.
It will be the last of Ireland’s three surviving banks to return to the subordinated debt market since the crisis.
Finance Minister Michael Noonan said in September he expects to recover as much as €4 billion of the bank's bailout costs before selling a 25% stake in the company in the middle of next year.
AIB sold €1.6 billion of contingent convertible notes to the Government in July 2011. These will be redeemed at maturity in July 2016 and will not be repaid early, the sources said.
