Bank of Ireland and CaixaBank tap covered bonds as yield premiums fall

Bank of Ireland and Spain's CaixaBank are among lenders selling covered bonds in Europe after yield premiums on the secured debt fell to the lowest point in almost six years.

Bank of Ireland said yesterday it had raised €750 million in five-year debt in an exercise it said was close to three times oversubscribed.

More than 140 international investors took up the debt, the bank said, with the issue priced 80 basis points above five-year mid-swaps

“The covered bond transaction was issued by Bank of Ireland Mortgage Bank under the Irish Asset Covered Securities legislation,” the bank said. The offering, yielding 1.82 per cent, is backed by a pool of Irish residential mortgages.

Separately, Spain’s third- largest lender is selling €1 bil- lion of bonds maturing in 2024, according to people familiar with the deal.

The average extra yield in- vestors demand to hold cov- ered bonds in euros instead of government debt fell to 68 basis points, the narrowest spread since June 2008, according to Bank of America Merrill Lynch index data.

Borrowers are turning to covered bonds as a second year of negative net issuance spurs demand for the debt. – (Bloomberg)