Allied Irish Banks’ (AIB) default swaps are required to pay out following a ruling by the International Swaps and Derivatives Association (ISDA), Reuters reports. The ruling states that one or more auctions will be held to settle AIB credit default swaps (CDS), which had a value of £310.6 million in the week ending June 3.
As per the ISDA, the credit event occurred on June 9 when state-owned AIB suspended interest payments and extended maturities of most of its outstanding junior debt ahead of a buyback that will impose losses of up to 90% on investors. AIB was required to generate around £1.76 billion from imposing losses on junior bondholders.
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