AIB calls a halt to bond payout due to court case
ALLIED Irish Banks will halt an interest payment of £22m due on a junior bond at the centre of a legal challenge until Ireland’s High Court rules on the case, the lender said yesterday.
New York-based investment firm Aurelius Capital is challenging the Irish government’s move to impose losses on junior bondholders in AIB and cut the cost to the taxpayer of bailing out what was once Ireland’s largest listed lender.
Ireland’s government, which effectively nationalised AIB late last year in the face of mounting property losses, has so far squeezed €1.6bn out of investors holding AIB’s junior paper.
Using a sweeping new financial law, Dublin offered junior bondholders the choice of either accepting as little as 10 per cent of the face value of their investments or else seeing their holdings effectively wiped out.