AIB's junior bondholders face expensive haircut despite legal challenge

Junior bondholders at AIB are still facing a multimillion euro haircut despite a legal challenge.

The High Court has confirmed burden-sharing will go ahead for most of the different categories of subordinated bond debt.

Investment firm Aurelius is opposing a court order secured by Finance Minister Michael Noonan in April allowing AIB to buy back subordinated bond debt at a massive reduction.

Today the court ruled that the order is still valid for most of the categories of debt held by junior bondholders, the exception being the two categories of debt that are the subject of Aurelius's legal challenge.

Michael Noonan has welcomed the court's decision because it clarifies the position for junior bondholders ahead of the deadline for accepting the terms of the bank's debt buy-back.

The legal challenge by Aurelius will resume in the High Court on Wednesday week.