Confirmation that AIB is today expected to emulate Bank of Ireland’s recent covered bond (ACS) issuance is a welcome development.

In a trading update issued yesterday morning AIB said that it “will re-engage with the market in a balanced and measured manner which is consistent with our strategy to ensure viable funding levels whilst building confidence with external investors”. Later that day it emerged that AIB was about to launch a new 3 year covered bond that is expected to be rated Baa3 by Moody’s and A by both Fitch and S&P.

This represents the first benchmark ACS public issuance by Ireland’s other ‘Pillar Bank’ in over five years. In this piece we look at the lessons from Bank of Ireland’s recent sale, the advantages for AIB of taking the new ACS issuance route, AIB’s mortgage pool and some of the economic factors that affect it.

To download the report, please visit this link: www.ncbresearch.com/PDF_Archive/2012-11/AIB.pdf

Philip O’Sullivan, Chief Economist.