AIB, NTMA deny any default on bond coupon
AIB and the National Treasury Management Agency (NTMA) yesterday took the unprecedented step of issuing statements asserting that the bank was not about to default on interest payments for its bonds.
The statements, at 5pm, came as rumours of an impending default on interest payments swept through markets in London and New York.
Dealers believed AIB was preparing not to pay interest on one subordinate bond which was due for payment today, and on another which was due to make payments on Friday.
Some believed such a move would have been a default event, a scenario that would have seen all of AIB's liabilities fall due on the day the payment was missed.
"AIB notes market speculation concerning the coupon due on March 23, 2011, in relation to a €400m lower tier two bond," the bank said in a statement.
"AIB confirms that this payment will be made."
Seven minutes later, the NTMA issued a separate statement "noting market speculation" and pointing out that AIB had confirmed the payment would be made.