Bank of Ireland is close to a private sale of bonds secured on UK residential mortgages, according to two people with knowledge of the matter.

The lender may raise about £1 billion (€1.15 billion) of funding in the accord, according to one of the people, who declined to be identified, as talks are not complete. A deal may be agreed within weeks, subject to market conditions, the two people said.

While Irish banks have been locked out of public debt markets since before the bailout in November, Bank of Ireland has raised about €2.9 billion of term debt since June, using UK residential mortgage assets as security.

The debt, which wasn't state guaranteed, had an average duration of 2.2 years and was priced at 265 basis points over three-month Euribor, the benchmark rate at which European banks lend to each other in euros for three months.

Earlier this month, chief executive Richie Boucher said the bank anticipates doing more unguaranteed, secured term funding by the end of the year. A spokeswoman for the bank declined to comment on any upcoming debt sales.

Bank of Ireland raised about €4 billion of equity capital this year. Some €3.7 billion of this was generated privately, leaving it alone among the country's six largest lenders to avoid majority state ownership.

Bloomberg