Bank of Ireland was offered €1.25bn on the markets yesterday in its first senior unsecured bond deal since 2009.
The bank opted not to borrow any more than the €500m it was targeting, despite the oversubscription.
The good demand allowed the bank to borrow at 2.2pc over mid swaps – the pricing benchmark – instead of the 2.25pc premium initially guided.
The latest bond pricing translates into an annual interest rate of 2.75pc over three years.
By comparison the State would pay an annual interest rate of 0.76pc to borrow for two years, or 2.2pc to borrow over five years.
Demand for the new deal came from abroad, which is normal for any Irish debt issuance through the capital markets.
The Bank of Ireland deal is the first test of investor appetite for unsecured bank debt that has no government guarantee since the financial crisis.
The auction was arranged by BNP Paribas, Deutsche Bank, Morgan Stanley and RBS.
It completes Bank of Ireland's mix of private sector borrowing and comes in the wake of its earlier issues of secured "covered bonds" since November and the January deal that saw the State sell its €1bn three-year Bank of Ireland convertible contingent capital (CoCo) bond at a small profit.
Bank of Ireland is the only Irish bank to avoid full state takeover.
Its gradual return to borrowing on the markets has been matched by rising share prices over the past 12 months.