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IL&P's $1.75bn bond attracts strong Asian and US demand

Irish Life & Permanent was finalising the pricing of a $1.75bn (€1.22bn) bond offering last night to American and Asian investors, as it became the first lender to use the extended guarantee scheme to go out into the market.

Market sources said last night that the three-year issue appeared set to carry an annual coupon of about 3.86pc -- 1.65pc over the benchmark mid-swaps market rate.

The final terms are expected to be announced this morning.

IL&P chief executive Kevin Murphy recently indicated that that the cost of the extended guarantee would equate to about 1pc -- four times the rate it had been paying under the original scheme, which is due to expire this September.

The bond sale, being managed by investment banks JP Morgan, Nomura and Deutsche Bank, was said to have attracted strong demand.

Sources said the managers were confident they could place $1bn of bonds and were "hopeful" of topping to $1.5bn mark.

"Hitting the $1.75bn level and, most importantly, at an attractive price, underlines the market's confidence in the new guarantee scheme and the group," said one market source.

Meanwhile, ratings agency Moody's yesterday assigned 'Aa1' ratings to new long-term bond issuances -- of up to five years -- covered by the extended guarantee scheme.

But it said the outlook on these ratings would be 'negative', in line with its view on Irish government debt.

"Given the Government's clear intention to continue to restore confidence in the country's financial system, Moody's expects that . . . should a credit event occur with any of the guaranteed institutions . . . claims would be paid in a timely manner," it said.

Irish Independent