Permanent TSB raises €500m through debt sale

Majority of investors will achieve a negative yield initially

Permanent TSB said the market reaction to the bond offer was “exceptionally strong”. Photograph: Alan Betson/The Irish Times

Permanent TSB said the market reaction to the bond offer was “exceptionally strong”. Photograph: Alan Betson/The Irish Times

 

Permanent TSB has raised €500 million from international investors by selling bonds backed by a pool of its mortgage loans.

Fastnet 13, the vehicle through which the sale was made, is a residential mortgage backed securitisation (RMBS), or a pool of mortgages packaged into classes so that they can be purchased by investors.

The fund was oversubscribed and a total of 38 investors supported the transaction which was arranged by Bank of America Merrill Lynch.

Pricing achieved on the sale was 42 basis points higher than European inter bank interest rates, with 80 per cent of the total, or €413 million, sold at 28 basis points higher than European inter bank rates. At current rates, the majority will achieve a negative yield on investment.

Declan Dolan, Permanent TSB group treasurer, said the market reaction to the offer was “exceptionally strong”.

“We issued the first post crisis Irish RMBS transaction, Fastnet 9, in November 2013. Since then there has been a transformation in investor attitudes towards both Ireland and Permanent TSB...This funding will both strengthen the Banks liability base and support lending growth”, he added.

The portfolio includes 6,098 loans with an average size of €131,779. All of the loans relate to properties that were owner occupied, 32.7 per cent of which were in Dublin.

The final maturity of the bonds is April 2057.