Anglo Irish Bank has raised €600 million of tier one capital, the core capital the bank is required to have by the Central Bank, to fund future lending.
Although the bank set out to raise just €200 million to €250 million, strong investors' demand prompted it to increase the offering to €600 million. The news helped push the bank's shares to a new high of €15.15 last night.
Mr John Bowe, head of debt capital markets at Anglo Irish, said the funds would allow the bank to grow its loan book in a substantial way, funding lending in 2005 and 2006 and beyond.
"We have significantly increased the overall capital base of the bank in this financial year," Mr Bowe said, noting it was an expression of the bank's confidence in the future.
This is the second substantial fundraising undertaken by Anglo this year. In June, the bank raised €750 million of tier two capital in a deal that enabled it to increase its loan book by half.
The latest €600 million in debt was sold to investors in 18 countries, with private or retail investors accounting for 65 per cent of orders while 35 per cent was placed with fund managers.
The biggest demand was from the Netherlands, where 30 per cent of the issue was placed, reflecting the presence of Dutch bank ABN AMRO as lead manager, along with Merrill Lynch. Irish investors took up 20 per cent of the debt with British investors taking 15 per cent.
The bond, which is perpetual, pays an interest rate of 6 per cent in the first year. After that, it will be priced at 25 basis points over the 10-year swap. Basically a variable rate product, the interest rate on it is capped at 9 per cent.Analysts said the deal left Anglo in a very comfortable funding position.
They noted the bank had just added €600 million to its Tier One capital which is forecast to stand at around €2 billion at the end of September, the end of Anglo's financial year. Shares in the bank finished strongly last night, closing 30 cents or 2 per cent higher at a record €15.15.
