BoI raises €700m with State-backed bond

BANK OF Ireland (BoI) has raised a further $1 billion (€700 million) by selling another State-backed bond in the first significant sale of debt by an Irish bank in the Asian market under the State’s bank guarantee scheme.

The sale was 1.4 times oversubscribed by investors and Asian institutional investors have provided 92 per cent of the debt.

The deal was priced at 190 basis points (1.9 percentage points) over the US dollar midswap rate, the benchmark for bonds in the market.

This converts to 135 basis points over midswaps in euro terms.

The bank paid less than the 190 basis points over midswaps for €1 billion raised last April and well above the 65 basis points paid for €2 billion raised last November.

Bank of Ireland said that the transaction arose as a result of inquiries following investor meetings held by the bank across the Asian region in recent weeks.

In addition to it being the first guaranteed Irish debt issuance in Asia, the term-funding deal was the first transaction in which the bank had targeted Asian investors.

Some 48 investors participated with 72 per cent of the debt being issued to banks, 20 per cent to central banks and official institutions, and 8 per cent to fund managers.

One bond analyst described the sale as “very positive” as it was the first time that Asian investors were interested in an Irish bank.

Some Asian central banks had invested in Irish Government bonds previously, but this was the first major interest in Asia in a fund-raising by an Irish lender.

BoI has raised more than €8 billion under the bank guarantee through public and private placements of debt.

The domestic financial institutions have raised more than €20 billion through the sale of bonds guaranteed by the State since last November, with between €15 billion and €18 billion raised in the wholesale money markets.