EBS follows big banks' lead with bond sell-off
Friday November 13 2009
EBS Building Society yesterday sold €1bn of bonds that are not covered by the Government's banking guarantee.
Market sources said the three-year bond, backed by EBS mortgages, ended up being placed with 65 institutions, mainly in Europe. They said that there was demand for well above the amount of bonds on offer.
The bonds were priced yesterday afternoon at 1.75 percentage points over the so-called 'mid-swaps' market rate.
For almost a year, Irish lenders had only been able to tap the debt market with bonds that were covered by the guarantee scheme, which is due to expire next September.
However, Bank of Ireland broke the ice in early September by selling a €1.5bn bond, covered by the bank's mortgage assets. The five-year deal was priced at 1.9 percentage points over the mid-swap market rate.
Allied Irish Banks went one step further later that month by selling an unsecured and unguaranteed bond, raising €1bn. This was followed by two further unsecured issues by both Bank of Ireland and AIB.
Proportionately, a €1bn deal is much greater for EBS than the country's two largest lenders. The group is preparing to transfer €800m of risky commercial property loans to the National Asset Management Agency.
EBS has already signalled that it will need a €300m capital injection from the State.
Irish Nationwide, which has also plans to raise €1.5bn in the debt markets this month, will need a €1bn-plus bailout, as it sends €8.3bn of loans - or 80pc of its portfolio - to the 'bad bank'.
- Joe Brennan
Irish Independent
