Allied Irish Banks is planning to sell its first junior bonds since imposing €5 billion of losses on holders of its riskiest debt, according to sources cited by Bloomberg.
The Government-owned lender is seeking to sell so-called Tier 2 notes as early as next week, depending on market conditions.
The funds would boost AIB's capital ratios and show it can issue such securities before the state starts to sell shares in the bank as early as next year, one of the people said. "AIB won't be making any comment on this," the Dublin- based bank said.
"The timing of a potential AIB subordinated bond looks very good for us, given how buoyant markets are at this time," said Investec economist Philip O'Sullivan. "We think that a sale by AIB would be well received by investors."
The rate on Ireland's two-year sovereign bonds dropped below zero for the first time today after European Central Bank policy makers yesterday cut their key interest rate and signalled at least €700 billion of aid to support the flagging euro- area economy.
When AIB reported its first underlying profit since 2008 in July, chief executive David Duffy said its capital position was strong as the European Central Bank completes stress tests on euro-area lenders.
The lender may use the bond proceeds to help refinance €1.6 billion of Government-held contingent convertible notes after the stress tests, Mr O’Sullivan said.
