Thursday 22 February 2018

Anglo's sale of two state-guaranteed bonds helps raise €2.25bn for bank

Joe Brennan

Anglo Irish Bank yesterday raised €2.25bn through the sale of two bonds, which are covered by the extended state-guarantee scheme.

The bank raised €1.5bn of two-year notes, which were priced at 1.2 percentage points over the so-called mid-swaps market rate.

It equates to an interest rate of about 2.65pc.

Anglo also sold €750m of five-year bonds, which were priced to yield 1.65 basis points over the swaps rate.

This equates to an overall rate of about 4.05pc.

Debt market sources noted that the price of the five-year bonds for other Irish banks are currently trading at as much as 0.2 percentage points below the new Anglo bond.

This reflects market unease about the massively loss-making group and its ability to get a restructuring plan over the line.

"Still, the result is decent, given unease in the debt markets regarding the Greek (financial crisis)," said a senior market source.

Last week, Anglo revealed it posted a €12.7bn loss for the 15 months to the end of December, after stomaching more than €15bn of bad loan losses.

The group's new management team is looking to split the bank into an internal 'good' and 'bad' bank, after NAMA takes more than half of its €70bn loan book.

The aim is to run down the bad element of the group over time.

Sources said both bond placements were oversubscribed, and that the National Treasury Management Agency as well as the Department of Finance were "happy" with the take-up of the deals.

Anglo's customer deposits have almost halved to €27.2bn since the original government-guarantee scheme was introduced back in September 2008.

The group had been relying on a €23.7bn funding lifeline from central banks -- including €11.5bn from the Irish Central Bank -- at the end of last December.

This was up from €7.6bn 18 months ago.

Irish Independent

Promoted Links

Business Newsletter

Read the leading stories from the world of Business.

Promoted Links

Also in Business