Tuesday 6 December 2016

BoI close to raising €1bn in bonds on UK mortgage book

FINANCE

Published 28/09/2011 | 05:00

BANK of Ireland is close to raising more than €1bn by issuing bonds secured against its UK mortgage book, it emerged yesterday.

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The news comes a fortnight after the bank's chief, Richie Boucher, told a parliamentary committee that he "anticipated" issuing more secured bonds "by the end of the year".

The bonds aren't covered by the state guarantee, but investors have recourse to the underlying assets if banks can't repay the money -- so they're betting on those assets rather than the banks.

Newswire Bloomberg yesterday reported that the bank could close the UK bond deal within weeks "subject to market conditions".

A spokeswoman for the bank declined to comment yesterday, but the Irish Independent understands the report to be accurate.

The bank also declined to comment on the pricing of the bonds or the identity of the bond's potential investors.

Some €2.9bn of similar bonds have been issued by BoI since last June, priced at 2.65pc over the three-month interbank lending rate for an average term of 2.2 years.

With Irish banks locked out of the regular funding markets, securitised bonds have become the favoured source of accessing market funding.

Irish Life & Permanent recently raised £1.4bn (€1.6bn) of funding secured against its UK loan book and said it was hoping to complete another £1bn transaction by the end of the year. (Additional reporting: Bloomberg)

Irish Independent

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