Business Irish

Tuesday 12 November 2019

Moody's downgrade for AIB junior bonds

RATING agency Moody's last night downgraded AIB's subordinated bonds by one notch from Ca to C.

The cut comes after AIB announced a plan to buy back its subordinated and tier 1 debt for cash at a very steep discount.

The rating for deposits and more senior bank debt has not been affected.

Moody's said it had classed the buy-back offer as a "distressed exchange" because the discount was so large -- at up to 90pc and because it considered the offer coercive.

That's because under the terms if 75pc of bondholders agree to the offer, any dissenting bondholder will be forced to accept just 1 cent per euro for their bonds.

Moody's said such distressed exchanges were a form of default, even though the bank would not actually file for bankruptcy or miss an interest or principal payment.

Irish Independent

Also in Business