Saturday 21 April 2018

BoI raises €2.5bn from five-year bond sell-off

Joe Brennan

BANK of Ireland raised €2.5bn yesterday by selling a five-year bond that is covered by the new state banking guarantee.

It marks the largest amount raised by an Irish lender in a single deal since the original guarantee was brought in almost 16 months ago.

It was priced at 1.45 basis points over the benchmark 'mid-swap' market rate, equating to a 4pc annual coupon or interest rate.

The bank must also pay the Government an annual guarantee charge, understood to be about 1pc, for the bond.

The bond offering, which was managed by BNP Paribas, Deutsche Bank, Societe Generale and JP Morgan, drew in €3.3bn of subscriptions.

It was placed among 162 investors, with 25pc of the bonds going to institutions in Germany, Austria and Switzerland, followed by a 17pc uptake from Irish investors, 14pc from France and 13pc from the UK.

Meanwhile, Allied Irish Banks confirmed yesterday that it had signed up to the new guarantee scheme, known as the Credit Institutions (Eligible Liabilities) Scheme 2009, which enables the country's lenders to issue bonds of up to five years in duration.

BoI and AIB must each refinance €5bn of publicly issued bonds in September, which is when the original guarantee comes to an end.

BoI has €13.6bn of debt due to mature for the entire year, while AIB has just over €12bn.

Irish Independent

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