Bank of Ireland’s €1bn covered bond was 3.6 times oversubscribed, with the price 120 basis points above three-year mid swaps.
This represents a significant reduction in pricing on previous Bank of Ireland issues over the past year.
The bond has a 3.5-year maturity and is backed by the bank’s Irish mortgage book. It had a coupon of 1.85%.
The issue was sold to a diversified range of over 200 international investors, according to Bank of Ireland. Lead investment banks on the transaction were Credit Suisse, HSBC, Lloyds, Natixis, and UBS.
Bank of Ireland has already issued three, five, and seven-year covered bonds over the last year, as well as junior and senior debt instruments.
“Since returning to the public bond markets in Nov 2012, the group has demonstrated sustained access to international funding sources and has successfully issued debt across the capital structure,” it stated.
“Over this period, the group has accessed public debt markets at a substantially improving price, reflecting the positive sentiment for Irish issuance and the progress being made by Bank of Ireland.”
A spokesperson said the issue had nothing to do with any fundraising that would occur prior to the bank possibly redeeming €1.8bn in preference shares before the deadline on Mar 31, 2014.
If the shares are not redeemed before then, the Government’s stake increases 25%.
Bank of Ireland is the most profitable of the pillar banks, and is on track to make a full return to the private fold.
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