Bank of Ireland has raised €500 million in seven-year dated secured funding through a euro fixed-rate covered bond issue.
The bond transaction was issued by Bank of Ireland Mortgage Bank under the investor-friendly Irish Asset Covered Securities (ACS) legislation. The trade was backed by a pool of 100 per cent Irish residential mortgages.
The bond issue follows the bank’s €500 million senior unsecured trade in May, €1.5 billion of three- and five-year ACS issued in November 2012 and March 2013, the €250 million tier-two subordinated deal in December 2012 and the bank’s CoCo refinanced from Government to private ownership in January 2013.
Book oversubscribed
The bank said the order book for yesterday's sale was oversubscribed at about €2.3 billion and the issue was sold to more than 150 investors. The coupon on the seven-year ACS is 3.625 per cent.
The success of the bond issue is a further vote of confidence by international bond investors in the bank, it added.
“Today’s seven-year ACS further demonstrates the group’s ability to access long-term funding from international capital markets and the strong investor interest reflects the progress being made by Bank of Ireland,” said the bank.
A breakdown of the investors showed that about 70 per cent were from Germany/Austria or the UK, with the former contributing slight more than the latter. Asset managers made up 56 per cent of investors, while 26 per cent were pension funds or insurance investors.
Earlier this month AIB issued a €500 million covered bond five-year benchmark transaction. It was the second time the bank had tapped these markets for funding this year and was seen as a further sign of the Irish banks' ability to raise money in the wholesale markets, as against relying on the European Central Bank.
The AIB deal was priced at a spread over mid-swaps of 180 basis points, and according to the bank, was “ well placed” with some 90 global investors.
The bank said that the deal “supports AIB’s stated objective to engage with the market in a measured manner”. In January, the bank issued €500 million at a yield of 2.644 per cent.
