Banks issue €8bn of bonds

Irish banks issued €8bn of bonds this week before the expiry of a government guarantee that allows them to be used as collateral with the ECB.

Bank of Ireland and Permanent TSB printed €5bn and €3bn of the notes respectively, according to the National Treasury Management Agency website, before the Government stopped guaranteeing new liabilities yesterday. The lenders will keep ownership of the notes, which they can exchange for ECB funding if needed.

“This is a very prudent move by the banks just before the guarantee expiry, giving them a collateral buffer, particularly after the uncertainty caused by the Cypriot bailout,” said Owen Callan, an analyst at Danske Bank in Dublin. “Cyprus has shown how things can flare up.”