Wednesday 13 December 2017

AIB 'pleased' with €3bn State-backed bond sale

Joe Brennan

Allied Irish Banks raised €3bn in the bond markets yesterday in two State-guaranteed transactions.

The bank initially tapped investors with a five-year bond, which raised €2bn. Orders for the bond reached €3.3bn.

The issue carries an annual coupon of just over 4pc, or what's known in the market as 1.55 percentage points over the benchmark 'mid-swaps' rate.

AIB also decided yesterday to issue a €1bn two-year bond, as a result of inquiries from bond investors.

"We're very pleased with both transactions, from the perspective of amounts achieved, price and investor and geographic spread," said Donal Murphy, head of wholesale treasury at AIB Capital Markets.

He said the bank took the "deliberate decision to leave unfulfilled demand in the market, being conscious of future issuance from the Irish system."

The transactions were managed by investment banks Credit Suisse, Deutsche Bank, JP Morgan Chase and Societe Generale.

Ahead of the new bond placements, Finance Minister Brian Lenihan revealed this week that over €37bn of bank liabilities are currently covered by the new State guarantee scheme.

The eligible liabilities guarantee (ELG) scheme allows lenders to issue bonds of up to five years in maturity.

The original two-year blanket guarantee for the country's six domestic lenders is due to expire at the end of September. The Government's fees for the new scheme are higher than the original.

Shares in AIB ended yesterday's session up 2.2pc at €1.40. Rival Bank of Ireland advanced 1.2pc to €1.17.

Irish Independent

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