Thursday 22 March 2018

Anglo props itself up with €162m Swedish investment

One unnamed pension fund takes up chunk of Anglo debt

Emmet Oliver Deputy Business Editor

ANGLO Irish Bank has found a new source of funding from the unlikely source of two investors in Sweden, one an unnamed pension fund.

The bank did a private placement of two-year floating rate bonds in recent days in Sweden with two investors, but declined to disclose the pricing.

They were issued under the Eligible Liabilities Guarantee (ELG), which allows banks to obtain a government guarantee for their debt.

The bank issued one bond for 1bn SEK (€108m), but tapped the Swedish investors for another 500m SEK (€54m), bringing the total amount raised to €162m.

"We generally don't disclose levels but we can say that it priced well in line with the ELG curve,'' said the bank.

Puttable bonds

The bank has also revealed it has now issued eight 'puttable' bonds since January 2009.

Puttable bonds involve a put option, which allows investors to call in the bonds and be repaid in full early, rather than waiting for the bond to mature in the normal way.

Other Irish banks have also issued these bonds, which are more attractive to investors than routine bonds.

Irish Life & Permanent has issued one of these bonds for €100m in the last 18 months, while AIB said it would do so only in response to demand from investors. Anglo has issued €335m of these bonds, most recently on August 1.

Anglo, which was nationalised in January 2009, has now paid off €7.9bn of bonds which matured in September.

However, the bank has declined to say what resources were used to redeem these bonds.

For example, it has declined to talk about whether assistance from the Central Bank of Ireland was used, but has denied suggestions that the ECB redeemed them for Anglo.

"You can't redeem what you didn't issue,'' commented one source.

All the bank would say was: "As flagged in the interim report, €7.9bn of government-guaranteed bonds were due to mature by the end of September. These were redeemed by the bank as planned."

Irish banks were said to be facing a "wall of worry'' in September as billions of euros worth of bonds came up for redemption.

But they do not appear to have refinanced much of this debt. Instead, they have turned to the ECB.

From the end of August to September 24, the amount of European Central Bank short-term lending to banks in Ireland rose by more than €24bn, to stand at just over €119bn.

Irish Independent

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