AIB 12.5% 2019 Bond

It was my understanding that you get the 'coupon', ie. 12.5% back as long as AIB doesn't default. But I'm not sure this applies to the capital returned at maturity. If someone could clarify this...

No, you get everything. You are taking on AIB credit risk. You are below senior debt holders in the capital structure but that would only come into play in the event of default as it would affect your recovery rate. There are no loss absorption features in this bond so they either pay up or they default.