AIB are now offering 12.5% on a new bond offering to apparently shore up its balance sheet. Can anyone explain in more detail what the offer is as I'm not fully versed in these kinds of investments.
This is a bond swap/tender similar to the excercise BOI did. AIB is buying back perpetual bonds at around 45-55 cent in the Euro and offering the investors a new lower tier 2 bond with a high coupon of 12.5% to encourgae them to sell the perpetual bonds they hold, at a discount. If succesful AIB will be able to book the difference between the discount price and the original issue price as a profit thereby increasing capital. This is for instititional investors who hold AIB perpetual bonds.