Business Irish

Tuesday 12 November 2019

Bondholder buy-back offer will cut up to €180m off PTSB's debt

Donal O'Donovan

Donal O'Donovan

State-owned Permanent TSB Group Holdings is set to cut up to €180m off its debt after buying back part of its own mortgage debt from investors at a discount.

The saving will come after the bank made an offer to "buy back" up to €1.2bn of bonds, with lenders offered minimum prices ranging from 33c in the euro to 75.5c in the euro by the bank, if they accepted the offer by October 5.

The offer was made on September 13 to buy back bonds secured on about €1.2bn of mortgage debt issued through PTSB's Fastnet 2 funding vehicle.

Sources involved said PTSB expects to save between €150m and €180m as a result of the offer, according to the Bloomberg newswire.

Results of the offer are due to be published today. Permanent TSB was nationalised last year, and was the country's biggest mortgage provider in the boom.

The latest offer to bondholders is voluntary. Any investor wishing to retain their holding was free to do so under the terms offered.

Last year PTSB booked €763m savings from more robust action to inflict "burden sharing" on junior bondholders who sold back bonds to the lender under threat of worse losses if they refused.

According to its latest set of accounts, losses worsened in the first half of the year to €566m. Thirteen per cent of PTSB's home loans and 28pc of 'buy-to-let' mortgages are in arrears. The bank's losses are largely a result of the need to set aside cash to cover losses on troubled home loans.

Management is currently splitting the bank into a 'bad bank' or asset management unit and a good bank that it is hoped can emerge intact from the financial crisis.

The Government has identified the bank's book of loss-making 'tracker mortgages' as a significant impediment to its recovery and wants European funds to help deal with the legacy loans as part of a wider deal on easing the cost of the banking rescue.

Irish Independent

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