Bond sale nets AIB a further €500m

AIB has successfully raised a further €500m, via the issue of a fixed rate five-year senior bond.

The move — flagged earlier in the week — further underlines investor confidence in Irish-based debt, as it was four times oversubscribed; attracting more than 170 international investors and €2bn worth of total demand from a diverse range of interested parties. The new bond has a coupon of 2.75%.

It is only the second time AIB has issued such a bond — a fixed-rate senior unsecured debt issue — since returning to the bond markets in late 2012.

Last November, it also raised €500m via such a sale. Back then, final pricing was at 235bps over mid-swaps; while yesterday’s was at 180bps.

Overall, since November 2012, the bank has raised €3.5bn via a range of different funding transactions — including four covered bond issuances, the two aforementioned senior unsecured issuances, and a credit card securitisation — in line with its strategy of engaging with the markets “in a measured and balanced way”.

In a short stock exchange statement, yesterday, AIB said that the latest bond issuance “reflects continued progress at AIB and demonstrates its improving funding position, pricing and access to capital markets”.

Earlier this week, AIB announced that it was making available a further €500m in lending facilities to the agricultural sector; an area which makes up approximately 30% of its total SME loan portfolio.

Meanwhile, addressing yesterday’s Joint Oireachtas Finance Committee — which is, this week, quizzing the main banks on the progress of their mortgage solutions — AIB chief David Duffy stressed the need for better engagement between distressed borrowers and the banks, saying AIB has explored new avenues, such as using consumer advocacy groups.