BoI plans to blaze €10bn bond trail
The bank said investor demand for the first stage of its latest programme was “phenomenal” and three times the level needed.
Over 130 fund managers, banks and insurance companies from 23 countries around the world snapped up the bank’s first Asset Covered Security (ACS), a bond secured on the bank’s portfolio of mortgages.
The bank’s global markets division, which looks after funding requirements, raised €2bn from the first phase and will use the money to fund lending activity across the Bank of Ireland group. It plans to raise a further €8bn over the next five years by issuing more bonds.
Chief executive Brian Goggin said the success of the first bond was a vote of confidence from international investors in the Bank of Ireland brand, the ACS product and the Irish economy.
Bank of Ireland is the first Irish bank to take advantage of legislation brought in three years ago that made Irish-issued ACSs more attractive to investors than those from almost any other country.
Irish law provides special protection for investors which other countries are seeking to adopt to make their bonds an easier sell worldwide.
Two-thirds of the bond’s buyers were from continental Europe, with a further 11% from Asia, 9% from Scandinavia and 4% from Britain.
Most of the European interest came from Germany where the ACS market has been well-established since the 1970s. By contrast, the UK market has yet to take off and no legal framework has yet been put in place.
Bank of Ireland Global Markets chief executive Mick Sweeney said he was particularly pleased with the level of Asian interest in the bond.
“It’s the greatest Asian interest in a European asset-covered bond to date,” he said.
The bond is considered a highly secure investment for fund managers and has received a AAA rating from leading international credit agencies. This rating is considered as secure as lending to the Irish government.
CONNECT WITH US TODAY
Be the first to know the latest news and updates
