Business Irish

Thursday 14 December 2017

BoI set to sell longest public bond since start of crisis

Plans show new interest in Irish borrowing

Bank Of Ireland on College Green, Dublin
Bank Of Ireland on College Green, Dublin
Colm Kelpie

Colm Kelpie

BANK of Ireland is preparing to sell a seven-year covered bond – the longest public bond offering from an Irish bank since the financial crisis began.

The plans are another sign of renewed appetite for Irish borrowing as the country prepares to exit the bailout at the end of the year and return to the international money markets on a full-time basis.

The bank has only issued three and five-year debt up until now.

Citi, Danske, Deutsche Bank, Nomura and RBS have been hired as lead managers for the €500m no-grow issue, which will be priced in the near future.

The bank's move comes as ratings agency Moody's changed its outlook from negative to stable on the government guaranteed debt of AIB, Bank of Ireland, EBS and Permanent TSB.


Moody's raised its rating for Irish government bonds last week.

Ryan McGrath, of Dolmen Stockbrokers, said that Bank of Ireland is well funded and is not in any immediate need of funding.

"Bank of Ireland, since December last year, has been opportunistically accessing bond markets and when they see that the time is right and they can avail of cheaper funding they have done so and done so successfully on a number of occasions during the year," he said. "Be it with covered bonds, senior unsecured in May and the CoCos (contingent convertible capital bonds).

"From the bank's point of view, the bank is very well capitalised and would not be in any immediate need of funding. What the bank is trying to do here is maintain their visibility within the market."

Mr McGrath said the Bank of Ireland issuance will be well received by investors – the majority of whom he predicted would be from overseas.

"With the majority being seven years, it would indicate a greater degree of market confidence," he said.

"But this is a covered bond, it is secured on a pool of assets. It is another big step forward for Bank of Ireland as they intend to re-engage with bond markets."

Earlier this month it was reported that Bank of Ireland could tap shareholders again for cash within months as it seeks to repay €1.8bn of its government bailout.

The preference shares are a legacy of the State's initial €3.5bn rescue of Bank of Ireland in 2009. Bank of Ireland avoided majority state control during the crisis but the Government still controls a 15pc stake in the bank.

Meanwhile, ratings agency Moody's said it changed its outlook to stable from negative on the Ba1 government-guaranteed debt of AIB, Bank of Ireland, EBS and Permanent TSB.

The move follows Moody's change of outlook to stable from negative on Ireland's Ba1 government's bond ratings on Friday. (Additional reporting Reuters)

Irish Independent

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