AIB says it has raised €700 million with the issue of a new bond to institutional investors, with the bank reporting that strong demand from investors had driven down the interest rate.
The bank said it cut the rate on the Additional Tier 1 (AT1) perpetual bond from 6.5 per cent to 6 per cent as initial demand peaked at €3.9 billion.
The bond, which is AIB’s largest AT1 transaction, will help the group meet its regulatory capital requirements.
The issue is the first Euro AT1 deal of the year in Europe, with the investors being mainly high-quality asset managers. More than half were British and Irish-based investors, with French investors accounting for 19 per cent and remaining 24 per cent spread across other regions.
“AIB is well positioned for sustainable growth through our strong funding and capital,” said AIB chief executive Colin Hunt. “We are delighted to again see strong demand from investors for our latest bond issuance, the first Euro Additional Tier 1 perpetual bond issued in Europe in 2025. This is a vote of confidence in the bank’s three-year strategy which we are implementing at pace.
“We continue to prioritise an enhanced focus on our customers, further greening our business and driving greater operational efficiency and resilience while delivering for our customers, our investors and the wider economy.”
AT1 bonds can be converted to equity or written down entirely if the bank’s capital strength – its Common Equity Tier 1 (CET1) ratio – were to fall below 7 per cent. As a perpetual bond, it does not have a maturity date.
Given the additional risk being taken by investors over other types of debt, AT1 bonds are typically the highest-yielding bank bonds investors can buy.
AIB previously raised €625 million from an AT1 bond in April of last year, and €650 million of Tier 2 subordinated bank capital in May, its second green capital issuance and sixth green bond. In total, AIB has raised €6.4 billion to date from green and social bonds.
- Sign up for the Business Today newsletter and get the latest business news and commentary in your inbox every weekday morning
- Opt in to Business push alerts and have the best news, analysis and comment delivered directly to your phone
- Join The Irish Times on WhatsApp and stay up to date
- Our Inside Business podcast is published weekly – Find the latest episode here
