Bank of Ireland raises €750m

Bank of Ireland has raised €750m through a five-year covered bond secured against its mortgage book.

Bank of Ireland raises €750m

The issue was three times over subscribed with total demand at roughly €2.2bn. The price was 80 basis points above mid-swaps with a yield of 1.82%.

According to Bank of Ireland, the bond was sold to over 140 international investors.

“The high level of investor demand for this five year covered bond strongly underlines the group’s ability to consistently access funding from international capital markets at very competitive pricing,” the bank said.

Lead investment banks on the transaction were BNP Paribas, HSBC, Nomura and UBS Investment Bank. Co-leads were Davy and Glas Securities.

“Bank of Ireland has consistently accessed public debt markets at substantially improving prices over the last 17 months, demonstrating the progress being made by the group and the appetite for Bank of Ireland and Irish credit from international investors,” added Bank of Ireland.

The covered bond transaction was issued by Bank of Ireland Mortgage Bank under the Irish Asset Covered Securities legislation. The trade is backed by a pool of 100% Irish residential mortgages.

Borrowers are turning to covered bonds as a second year of negative net issuance spurs demand for the debt, which will be exempted from rules requiring bondholders to help absorb bank losses.

“Banks are incentivised to issue new covered bonds because huge redemptions have produced strong demand due to a desperate shortage of supply, and they also have regulatory benefits,” said Agustin Martin, head of European credit research at Banco Bilbao Vizcaya Argentaria in London.

About €120bn of covered bonds come due this year, according to data compiled by Bloomberg.

* Additional reporting Bloomberg

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