BoI raises £300m in UK debt placement
BANK of Ireland has raised £300m (€344m) from a UK private placement, marking the bank's first significant raising of UK money under the guarantee scheme.
The Richie Boucher-led bank announced the deal yesterday, and said it had been done on foot of a "large reverse order" where institutions look to buy debt that hasn't yet been issued.
The £300m is for three years at an interest rate of 5.75pc, backed by the Eligible Liabilities Guarantee scheme, usually known as the ELG.
"Pricing is obviously very expensive, but that is not unexpected given where sovereign spreads are at the moment," said Davy's financial analyst Stephen Lyons. "It's better for them to be out in the market doing some deals despite the cost to keep funding lines open."
His comments were echoed by Goodbody's analyst Ken Darmody, who said that while you "wouldn't want to be doing deals at that interest rate every day", it was good to see that there was an appetite for Irish bank debt.
Mr Darmody added that Ireland's decision not to issue more government debt this year could have aided the BoI deal.
"If people want to take on some Irish debt, the only way to access that now is through the banks," he said.
The market is still awaiting a long-expected €1bn-plus open offering of BoI debt, with sources now expecting that to come after the 'super-Budget'.
Debt issues from Irish banks have been negligible since the sovereign debt crisis in September, with Irish Life & Permanent (IL&P) the only bank to announce fundraising in recent months. The bancassurer raised almost €470m through private placements in September. The money was raised outside the guarantee scheme, with no details on interest rate revealed.