AIB returns to subordinated market with 750m 10NC5 Tier 2 bond

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LONDON, Nov 19 (IFR) - Allied Irish Banks (EUREX: 558453.EX - news) has opened order books for a 750m 10-year non-call five-year euro Tier 2 bond at mid-swaps plus 400bp area, according to a lead.

The bond is the bank's first attempt at a public subordinated offering since it imposed severe losses on subordinated debt investors during the height of the eurozone financial crisis. The bank was bailed out in 2009 and fully nationalised in 2010.

The issuer met investors in London and Frankfurt on Wednesday ahead of the deal.

"It (Other OTC: ITGL - news) 's a credit people want to get exposure to," said a lead banker.

An investor said he expected the book on the highly anticipated deal to close very quickly, with a likely spread of around swaps plus 375bp.

AIB, which is 99% state-owned and may float next year, has held discussions with European regulators about reorganising its capital structure. It agreed to issue at least 750m of Tier 2 capital and 500m of Additional Tier 1 to achieve a net increase in its capital levels.

The main comparable for pricing is Bank of Ireland (EUREX: 1269463.EX - news) 's 4.25% 750m 10-year non call five-year Tier 2 issued last year, which were bid around swaps plus 332bp on Thursday morning, according to Eikon.

Deutsche Bank (Other OTC: DBAGF - news) and Morgan Stanley (Xetra: 885836 - news) are joint global coordinators. BNP Paribas (Xetra: 887771 - news) , Deutsche Bank, Goodbody, Morgan Stanley, Nomura and UBS (NYSEArca: FBGX - news) are joint leads.

The transaction is expected to be rated B2/B/BB- (Moodys/S&P/Fitch). (Reporting by Alice Gledhill; editing by Alex Chambers)