150 investors lent money to AIB without being secured against state
guarantee.  Buying a bond means lending money to the seller.  In this
case AIB sells the bond and this means that investors who are
supposed
to be professionals accepted to lend to AIB for 5 years without
guarantee from government.  They do risk to lose all their money in
the case of a failure or nationalization.  These investors are either
totally stupid if they think AIB can't raise capital on its own since
this will cause them to lose all their cash in this failure scenario.
I guess those "noobs" assessed the situation and see the loan to AIB
as relatively solid and safe.  By the way,  it is not in any finance
book or mutual fund prospectus, but a good rule of thumb is that you
only lend money to parties you think it would be wise to take an
equity part.  If the party is equity-wise investment, this means that
the bond has good chance to be repaid,  if the party doesn't seem to
be a good equity investment, you only lend money to it against a high
risk premium and a solid guarantee/collateralization.

Many pension funds and investors messed themselves up by thinking
that
bonds are safer than stocks because bond lien is senior to stocks,
but what you want when you invest is not a strong lien in a sht
business,  you want a strong business in which the lien doesn't even
matter!  The better is if you get that cheaply!

On 5 Nov, 22:07, Fliujniligui <fliujnili...@gmail.com> wrote: