Saturday 21 September 2019

Bank of Ireland pulls out of €300m bond deal at last minute

Bank of Ireland has pulled a €300m bond deal at the last minute. Stock image
Bank of Ireland has pulled a €300m bond deal at the last minute. Stock image
Donal O'Donovan

Donal O'Donovan

Bank of Ireland has pulled a €300m bond deal at the last minute, amid muted demand and on going gyrations in the market ahead of a planned ECB interest rate setting meeting this month.

It is understood investment banks managing the bond deal had secured €340m of orders, more than the bank was seeking but a relatively low so called bid-to-cover ratio in a market where bond deals are typically oversubscribed.

The low demand increased the risk that the bonds could dip in later trading, leaving bondholders nursing paper losses and possible resentment. The bank opted to postpone the deal instead, sources said.

In a statement, Bank of Ireland said it decided to postpone its proposed transaction “in order to ensure successful execution for both the issuer and investors. Bank of Ireland would like to thank investors for their interest in today’s announcement.”

The so called tier 2, 10 year, subordinated bond had been on course to price at a low cost to the bank of around 2.70pc annual interest.

Pricing debt in the bond market has become fraught with difficulty for investors and for debt issuers, as fears of a global slow down combine with a so called wall of money, including from central banks, chasing bond market assets.

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