AIB is likely to book a capital gain of at least €1.3bn and reduce its annual interest bill by more than €200m on foot of a debt-buyback initiative launched yesterday.
The almost-nationalised bank is offering investors a cash payment of 30c in the euro for €3.9bn worth of AIB's riskiest debt instruments.
The gain will count towards the €6.1bn in capital that AIB has to raise by the end of the year, reducing the amount of cash the State has to plough in.
Fergal O'Leary, director at fixed-income specialist Glas Securities, said it was "not unreasonable" to assume that 50pc of debt holders would take up the offer.
"There's a degree of fear that, down the road, there could be a more coercive offer," said O'Leary, pointing to recent legislation enabling banks to force losses on bondholders.
"The risk is that if a bondholder doesn't subscribe to this, the next offer (if there is one) could be at a lower price, and it may well be coercive."
Bloxham banking analyst Kevin McConnell said AIB could have a "reasonable expectation of a decent enough take-up" of something in the region of 50pc.
"A 50pc take-up would generate €1.37bn of capital up front, but would also save €200m in annual coupon [interest payments]," Davy's banking team said in a note to clients.
"Every 10pc increase in take-up adds a further €137m in capital and further reduces the interest bill by €20m," the note added.
Market sources say the offer is attractive because AIB is giving investors hard cash for their debt. Recent debt exchanges from Irish banks have tended to be for new bonds, which themselves carry risk.
But sources point out that AIB is unlikely to get "really high" takeup because more than half the €3.9bn being targeted is debt recently issued by AIB as part of a buy-back exercise.
"Those guys have already taken a haircut, they may not want to take another one," said one source, adding that many had expected AIB to offer a premium for those recently-issued bonds.
Others point out that the AIB offer is "penal" since its 30c-in -the-euro pitch is quite close to the 20c in the euro offered by Anglo, which is perceived as a much more troubled institution.
The offer follows similar plays by Bank of Ireland and Anglo Irish Bank, which have both bought back billions of debt at a discount in recent months.
But while Bank of Ireland's offer is designed to help the bank fend off majority state control, Davy's yesterday pointed out that the outlook for AIB's state ownership "doesn't really change".
AIB is already effectively 92pc owned by the taxpayer and will need further cash by the end of February, bringing state ownership to "mid-to-high 90pc" in Davy's view.