Wednesday 24 January 2018

AIB subsidiary raises €500m in bond issue

John Mulligan

John Mulligan

AIB's Mortgage Bank subsidiary has raised €500m via an asset covered securities (ACS) bond.

It marks the bank's second bond issue in just over two months and its continuing effort to wean itself off loans from the European Central Bank and replace the funds with private-sector borrowings.

The bank said that it raised the €500m under a three-and-a-half-year term under its €20bn mortgage covered securities programme.

The ACS bonds aren't guaranteed by the State.

AIB said the deal was priced at a 185 basis points spread over mid-swaps, meaning investors will be paid an interest rate, or coupon, of 2.625pc. The bond was four times over-subscribed, according to AIB.

The lead managers on the issue were Barclays, Deutsche Bank, Morgan Stanley and UBS.

AIB said that the total order book for the bond was €2.2bn with more than 160 investors seeking to get involved. Demand originated from 20 countries and 99pc of the bond sale was placed outside Ireland.

The bond has been rated 'A' by the Fitch agency.

"This transaction demonstrates the continued progress of AIB's strategy of engaging with the market in a balanced and measured manner," said the bank.

In November, state-controlled AIB raised €500m from private investors. It paid a coupon of 3.125pc to borrow the cash over three years in a so-called covered bond issue that is secured on a pool of AIB home loans.

Earlier this month the Government sold €1bn of bonds, or contingent capital in Bank of Ireland – which escaped state control.

Irish Independent

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