£1bn in Euro note funding at bank

IRISH Permanent has arranged a £1 billion Euro note borrowing facility in line with group strategy to diversify its funding base and increase' its presence in international capital markets.

The funds will be used to mat the rising demand for mortgages in the Irish market and to fund the expansion of Capital Home Loans in Britain. Up to £400 million will be drawn down this year depending on price, according to the general manager of Irish Permanent Treasury, Mr Michael Torpey.

The programme will be "actively used" and Irish Permanent will start to draw down funds immediately given the strong demand for mortgages, he added. "The mortgage market is expanding much faster than the ability of the personal savings market to fund it and with personal "spending increasing the position wills get tighter", he said.

The new borrowing facility was arranged by investment bank Merrill Lynch International. It involves a global, or master agreement, which puts a structure in place to allow. Irish Permanent to raise funds from investors in a wide variety of forms, currencies and maturities. The forms include bond issues, syndicated tailored loans and subordinated loans. The loan notes, which will bed listed on the Dublin and London, stock markets, will be issued by Irish Permanent plc and Irish Permanent Treasury.

Debt rating agency Moody's has rated the notes A2, A3 and Baal for senior, dated subordinated and undated subordinated respectively.

On the issue of cost, Mr Torpey, said Irish Permanent will get the new funds at a lower cost than the charge of the interbank rate plus 0.1 of a percentage point on a £150 million sterling three year loan raised last October. The cost for three year funds is expected to be interbank rate plus 0.05 of a percentage point, he said. The ability to be meet investors needs in a flexible way will also help to reduce the cost of funds, he said.

In a programme where a number of dealers have been appointed to compete in raising the funds, rates are expected to be at the lower end of market charges. The dealers on the programme are Merrill Lynch, ABN AMRO Hoare Govett, Bank of Ireland, Barclays de Zoelle Wedd, J.P. Morgan Securities, NatWest Markets, UBS and Irish Permanent plc.