Bank of Ireland raises €250m from subordinated bond issue


Bank of Ireland yesterday raised €250 million from the issuance of subordinated bonds with a 10-year maturity. The so-called lower tier 2 capital issuance carries a coupon of 10 per cent.

The transaction follows Bank of Ireland’s €1 billion asset covered securities (covered bond) issue in mid-November.

Bank of Ireland said last night that the bond issue marked a “further important step” for it in achieving normalised capital markets access. The order book was oversubscribed at three to four times the issuance amount.

Deutsche Bank’s London branch was the lead investment bank on the transaction, and said the trade was a “significant vote of confidence by international bond investors in Bank of Ireland and Ireland. This further reflects the material progress made by the group and the economy.”

The funds will be used to supplement the Bank’s capital position. This is the latest fundraising by an entity connected with the Irish State.

NTMA debt issue

The National Treasury Management Agency has issued about €7 billion in debt this year while a number of companies, notably Bank of Ireland, AIB, Bord Gáis and ESB, have successfully raised funds on the markets.

This has given rise to the hope that Ireland might be able to exit its bailout programme with the IMF-EU troika at the end of 2013.

The Bank of Ireland issuance was welcomed by Owen Callan, senior fixed income strategist at Danske Bank Markets.

“Markets will regard this as the first genuinely ‘new’ issuance of subordinated debt by the Irish banks since the crisis began, and probably the first since as far back as 2005,” he said. “Given that this class of bond suffered significant losses during the crisis and was not protected by the Irish government, it’s encouraging that investors are willing to get involved in this market again.”