April 23, 2024 08:06 GMT
AIB AT1 Issue: We See Fair Value At 7.15-7.20% Area
FINANCIALS
Allied Irish is tendering for an AT1 issue and replacing with a new benchmark AT1 issue with IPT at 7.625%. We see fair value on the issue at 7.15-7.20% area.
- AIB is tendering for the AIB 5.25 Perp which has a first reset date at 9-Apr-25 – this has EUR500m outstanding and is rated Ba1 (Moody’s). Concurrently, the bank is offering a EUR benchmark PerpNC6 with an IPT at 7.625% area (so z-spread at MS+477.5bp).
- This is a relatively thin market, but ISPIM has a relatively well populated, contemporary curve and, much as this issue is coming better-rated by Moody’s (Ba1 vs. Ba3), the existing AT1 trades wide of ISPIM’s curve anyway and is similarly-rated by S&P (both at BB-).
- ISPIM has an older (low coupon/price) instrument at similar workout and we think AIB fair value can come tight of this, perhaps as tight as MS+430-435bp area, which is 7.15-7.20% area.
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