Finance Ireland, the State’s largest nonbank lender, has raised more than €700 million in the bond markets to underpin its car finance and commercial property business, after deciding to exit home loans.
The Dublin-based company said it has raised €359 million from selling bonds backed by a pool of car loans issued by the company, or what is known as a securitisation deal. A further €348 million was raised from a commercial mortgage-backed securitisation transaction involving its commercial lending portfolio.
Investor demand for the bond was “significantly in excess” of the amount Finance Ireland sought to raise, it said in a statement.
“The strong pricing we achieved with these transactions shows a very solid vote of investor confidence in Finance Ireland,” said Jim Hickey, chief financial officer at the company.
“We were pleased to see diverse and broad-based demand from a wide range of blue-chip international investors across multiple jurisdictions. The transactions will give us increased lending capacity as we continue to grow our business.”
The bond sales came as it emerged this week that Finance Ireland is exiting the residential mortgage market, having, in 2018, been the first nonbank lender to start issuing home loans following the property crash.
It had been effectively out of the residential mortgage market for some time as its lending rates were high. The company also specialises in small business and agri-lending.
The lender’s chief executive, Billy Kane, had repeatedly spoken in recent years about how mainstream banks have been “actually cross-subsidising” their mortgage books with cheap deposit funding. Close to 90 per cent of customers’ money in Irish banks is in on-demand or current accounts, which are earning little or nothing, even as they offer rates of up to 3 per cent on certain savings products.
Nonbank lenders like Finance Ireland raise their funds through the wholesale banking and bond markets, where borrowing costs soared in recent years as the European Central Bank hiked official rates.
London-based investment groups M&G and Pimco, the US asset manager owned by Germany’s Allianz, own 90 per cent of Finance Ireland. The Irish company was set up in 2002.
