Bank of Ireland to boost reserves with bond issue

Bank of Ireland is preparing to boost its capital reserves with the sale of a euro-denominated tier 2 bond — its first since December 2012.

The deal could emerge as early as today provided market conditions are suitable, according to a banker close to the situation.

“If feedback allows we will print this deal as soonas it’s ready,” said a lead managing banker.

The bond offering is expected to be rated B by S&P and will be managed by BNP Paribas, Davy, Deutsche Bank, Morgan Stanley and UBS.

“Conditions are pretty good as the appetite for tier 2 debt has been really strong as we have seen from deals like Standard Chartered,” he said.

Standard Chartered got over £2.25bn orders for a £900m 20-year tier 2 bond offering earlier yesterday as investors rushed to get their hands on longer-dated subordinated debt.

Bank of Ireland, the only Irish lender to escape nationalisation, is likely to benefit from the fact that it has been on an upward trajectory since it returned to the public debt markets, with a covered bond, in 2012.

Since then it has sold senior debt — a €250m 10% tier 2 bond.

More recently the bank raised €580m through a share sale that was part of a milestone deal to repay €1.9bn to the state, handing the Government a timely financial boost.

Bank of Ireland escaped falling into full state control after the last stress tests, when a group of north American investors led by Wilbur Ross and Prem Watsa bought a 35% stake just months after Ireland was bailed out.

- Reuter