EBS raises €1bn in funding through public bond sale

EBS BUILDING Society became the last of the six guaranteed Irish financial institutions to raise funding in a public bond sale using the bank guarantee when it raised €1 billion from investors.

This brings to €8.1 billion the total amount raised by the lenders from the sale of guaranteed bonds.

EBS completed a €200 million bond issue under the guarantee in February, but this was sold to one investor. The latest bond was sold to 50 investors in 12 countries, with demand to buy €1.1 billion. The building society had initially planned to raise €750 million.

EBS paid the highest margin of the six lenders since the sale of State-backed bonds began last November when AIB, the State’s largest bank, raised €2 billion.

This reflects the growing risk associated with Irish financial institutions over the past five months.

EBS paid 200 basis points, or 2 per cent, over the mid-swap rate, the benchmark used to price bonds in the debt markets.

This compares with a margin of 55 basis points over the benchmark rate paid by AIB and 65 basis points for Bank of Ireland’s €2 billion bond last November.

Anglo Irish Bank paid 80 basis points over the rate for €1.5 billion last December, while Irish Nationwide paid 70 basis points over the rate for a £325 million (€372 million) bond late last year.

Irish Life Permanent raised €1 billion in February, paying 175 basis points over the base rate.

The Department of Finance co-ordinated the series of bond sales in sequence under the guarantee scheme to ensure no one lender would absorb all of the funding that could be available to Irish banks among bond investors.

Irish Life Permanent was due to be third in the sequence, but was asked by the department to delay its bond issue to allow Anglo Irish, which was originally fourth in the queue, to sell a bond before its annual results last December.

EBS said the €1 billion bond issue would strengthen its funding and liquidity position.

“To be able to complete a €1 billion issue proves that even in the exceptionally difficult times we are living through, both Ireland and EBS can attract foreign investment,” the building society said.

The debt issue followed the re-affirming of its A2 rating by credit rating agency Moody’s.

EBS said that more than half the €1 billion raised came from international investors, which included fund managers, private banks, insurers and central banks.

The scale of individual investments ranged from €100 million to orders of less than €1 million.