AIB raises €1bn in bonds for projects with ‘clear social benefits’

AIB has raised €1 billion for the financing of projects "with clear social benefits" and to further strengthen its funding position after it issued what was the first social bond by an Irish bank.

AIB said it will use the funds to lend to projects in the healthcare, education, social and affordable housing sectors, as well as to provide loans to SMEs in socio-economically disadvantaged areas in communities across Ireland.

AIB chief executive Colin Hunt said: "Investors are increasingly choosing to invest in firms with strong environmental, social and governance (ESG) credentials.

“This is another investor vote of confidence in AIB, which has over the last two years already raised €1.75 billion for lending to projects that help in the fight against climate change.

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“As a bank at the very heart of the Irish economy, our role is central to the creation and delivery of sustainable economic, social and environmental development in towns and communities across the country.”

Investor interest

Stockbroker Goodbody and the other members of the joint lead manager group announced the transaction on international capital markets on Monday morning, and investor interest built strongly, peaking at more than €2.1 billion.

The bond was issued at a fixed interest rate of 2.25 per cent with a final order book almost twice oversubscribed comprising 97 investors, spread across 21 countries.

The social bond was issued after AIB engaged with ESG investors across Europe on its wider sustainability strategy following the launch last year of its social bond framework on which Dutch bank ING acted as an advisor.

In order to be labelled “social’’, the AIB bond must comply with the International Capital Markets Association’s (ICMA) social bond principles governing the use of the bond proceeds and related transparency and reporting requirements.

AIB obtained external second party verification from ISS-ESG, which assessed alignment with the ICMA principles and confirmed that the use of proceeds from the bond issuance contributed “significantly” to the relevant UN sustainable development goals.