Friday 20 October 2017

AIB books a small profit in deal to buy back debt

AIB has bought back debt at a discount from bondholders
AIB has bought back debt at a discount from bondholders
Donal O'Donovan

Donal O'Donovan

AIB has booked a modest profit after buying back debt at a discount from bondholders.

The bond deal closed just ahead of the bank's latest distribution of new shares to the Government in lieu of a cash dividend on its €3.5bn of preference shares, raising taxpayers' stake in the lender marginally.

AIB booked profit of around €13m on its tender offer to buy back a portion of its Emerald securitisation deal – a mortgage-backed debt deal originally issued by EBS.

The deal was designed to offer holders of the illiquid investment an exit on the bank's terms ahead of a step in interest later this summer.

Following a public tender, holders offered to sell back €320.3m of the outstanding €850m of bond, and the bank agreed to buy back €105m of the debt at discounted prices ranging from 92.4pc of face value to 48.8pc of face value.

Discount

The deal reduces the outstanding balance of the bonds to €645m and the discount gives the bank a "profit" that goes to capital of €13m.

Yesterday, the bank also formalised its previously announced decision to issue 2,177,293,934 ordinary shares to the National Pensions Reserve Fund Commission (NPRFC).

Meanwhile, the liquidators of the former Anglo Irish Bank are understood to be again examining a sale of €843m of NAMA bonds that are among the remaining assets under their control.

A previous sale was pulled when prices failed to meet the liquidators' reserve.

Liquidators Kieran Wallace and Eamonn Richardson of KPMG are seeking tenders by 5pm today from brokerages who think they can manage the sale, according to news agency Bloomberg.

Irish Independent

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