AIB has raised €700m from the issuance of a new bond to institutional investors.

The bond, known as an Additional Tier 1 (AT1) perpetual bond, offers an interest rate of 6%.

The bank said the funds raised will help it to meet its regulatory capital requirements.

In a statement the bank noted it was the first Euro AT1 deal of the year in Europe which they said reflected "market confidence in AIB’s performance".

AT1s can be converted in to equity or written down entirely if the issuing bank's capital strength were to fall below a pre-determined trigger level which is why the interest rate is high.

Initial demand from investors was strong, peaking at €3.9bn, enabling the bank to reduce the coupon on the bond down from the originally envisaged interest rate of 6.5%.

The investor book primarily consisted of high-quality asset managers, with UK/Ireland investors accounting for c.57%, French c.19%, and the remaining 24% of orders spread across other regions.

The issuance was AIB’s largest AT1 transaction on record. Last April the bank raised €625m from the issuance of an AT1 bond.

AIB CEO Colin Hunt said: “AIB is well positioned for sustainable growth through our strong funding and capital. 

"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.’’

The lead arranger group on the issuance was Bank of America, Goldman Sachs, Goodbody Stockbrokers, JP Morgan, Morgan Stanley and UBS.

Pic: Shane O'Neill, SON Photographic