Bank of Ireland plans to sell £2.27bn prime UK mortgage debt

Bank of Ireland could raise as much as £350 million (€397 million), The Irish Times believes, through the sale of debt backed by some of its prime UK mortgages.

The State’s largest domestic bank by assets is planning to refinance a basket of loans worth £2.27 billion, of which a benchmark will be sold to external investors. It is expected that that benchmark would translate into funds of £250 million-£350 million being raised.

Bank of America Merrill Lynch and Lloyds Bank were the lead managers on the transaction, while Lloyds Bank Corporate Markets was the arranger.

More than 91 per cent of loans within the portfolio carry a triple A rating, while 8.63 per cent carry no rating.

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The loans are, the bank said, high-quality UK residential mortgage loans, which are being bunched together for its external wholesale funding transaction being conducted through securitisation.

Securitisation involves bonds being issued to international investors, who would receive interest payments financed by income from the portfolio.

Stable funding

“The transaction, which involves the issue of notes to third-party investors, will provide diversified, cost-efficient, long-term stable funding and demonstrates Bank of Ireland UK’s continued progress towards transforming its business and delivering against its priority to improve returns,” a spokesman said.

In March, Bank of Ireland announced plans to refinance a basket of its non-performing Irish mortgages worth about €375 million. The move was designed to reduce its non-performing exposure ratio to about 5.8 per cent, something it is under pressure to do.

In relation to the UK debt sale, “there is no impact on customers as a result of the transaction and they do not need to take any action”, the spokesman said.

“The bank will continue to service these mortgage accounts and all terms and conditions remain the same.”