Anglo Irish debt issue sees bank raise €750m

Anglo Irish Bank last night completed the largest issue of debt capital by an Irish bank when it raised €750 million to fund future lending.

The deal will enable the bank to increase its current loan book by half.

Anglo Irish initially sought to raise €500 million from bondholders in lower, tier two subordinated capital but increased the fundraising following significant investor oversubscription.

A spokesman for ABN Amro, Barclays Capital and BNP Paribas, who acted as joint lead managers on the deal, said: "This is the largest ever issue of debt by an Irish financial institution and it has gone down a storm."

Investors from more than 17 countries worldwide have invested in the 10-year company bonds, which carries an A3 rating from Moody's and A- from rival Fitch.

Mr Dominic Franklin, head of UK and Ireland debt origination in ABN Amro's financial markets business, said around 90 investors had taken part in the issue. While fund managers accounted for 71 per cent of the take-up, banks, insurers and pension funds were also involved.

He said the fact that the debt was spread widely, with no one investor holding a large proportion of the Anglo paper, should boost its performance on the secondary market.

Anglo Irish has a current loan book of €21 billion. The new capital will allow it to lend a further €10 billion.

Mr John Bowe, head of debt capital markets at Anglo Irish, said: "The success of this issue says something about investor interest in us and about our confidence in the future. It underlines the strong belief investors have in the continued growth and development of Anglo Irish Bank."

Anglo Irish has been one of the fastest-growing financial institutions in recent years. Investors have been rewarded with continued outperformance by its shares.

Chief financial officer Mr Tiarnan O'Mahony said the progress of the bank could be measured by the premium it was paying for the funds. Anglo Irish will pay half a percentage point over the European interbank rate (Euribor).

"We did a similar, though smaller, issue three years ago and paid 125 basis points [1.25 percentage points\] over Euribor," he said.

He said that tapping bondholders for the funds avoided having to go to shareholders to fund further expansion.

"This means that Anglo Irish can grow its loan book by 50 per cent, growing profits by up to 50 per cent and therefore earnings per share," he said. "This fundraising... gives Anglo scope to move to the next level, to become a bigger bank, but doing the same blend of business that has been so successful to date."