IRISH LIFE & Permanent (IL&P) plans to raise €1 billion on the sale of a five-year Government-backed bond – the second time that the company has tapped the bond markets this year using the extended State bank guarantee.
Market sources estimated that IL&P would pay about 1.65 per cent over the midswaps rate, the reference point for pricing debt. This would be in line with the price paid by IL&P for $1.75 billion (€1.3 billion) raised on a three-year dollar denominated bond in January, when it became the first lender to raise debt under the extended guarantee.
Financial institutions are taking advantage of more favourable investor sentiment towards Irish sovereign and State-backed debt, as the bond markets have been reassured by the Government’s efforts to reduce the public deficit.
The banks are expected to continue to raise funding under the extended guarantee over the coming months as they refinance €25 billion in debt, which is to mature before the end of the two-year blanket guarantee in September.
More than €7 billion has been raised by IL&P, Bank of Ireland, AIB and EBS building society under the extended guarantee scheme over the past two months.Anglo Irish Bank and Irish Nationwide are the only lenders not to have issued public debt under the extended guarantee, despite signing up to it a month ago.
Meanwhile, IL&P has appointed Bernard Collins, a former senior executive and international board member at Boston Scientific, as a non-executive director.
Mr Collins is chairman of health insurer VHI and a non-executive director of IDA Ireland.
IL&P is expected to post an operating loss of about €190 million when it announces its 2009 results today, according to the consensus forecasts among analysts, as it deals with higher loan losses at Permanent TSB and lower new business sales at Irish Life.
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