BoI targets €120m from bond exchange
Published 03/02/2011 | 05:00
BANK of Ireland (BoI) is hoping to edge another €120m closer to its imminent capital targets by convincing another group of its lenders to accept writedowns.
The bank yesterday offered investors who spent about €260m on some of BoI's riskiest bonds the chance to exchange their holdings for safer bonds with a face value of about €140m.
BoI has already raised €700m through convincing lenders who owned a separate batch of risky debts to sign up for a similar exchange programme in December.
Even after that €700m, the bank still has to raise another €1.5bn by the end of February to reach new capital targets imposed by the Central Bank.
Sources confirmed the end-of-February deadline remained in place, despite the uncertainty created by the general election on February 25.
The latest debt exchange targets investors who bought Canadian dollar subordinated debt that is due to mature in 2015 and 2018. The investors are being given the chance to exchange those instruments for government guaranteed debt that will be repaid in 2012.
The discount level will vary for different securities, with investors getting new bonds with a face value of 52pc to 59pc of the riskier bonds.
Investors have been given a week to opt in or out, and results will be issued to the market on February 10.
The voluntary offer comes against a backdrop of new banking legislation that allows banks to force losses on subordinated bondholders, a factor that may increase take-up rates.