Financial Services

Bank of Ireland sells €300m of debt on second attempt

Rival AIB sold €500m of junior bonds last week

Photograph: Aidan Crawley/Bloomberg

Mon Oct 7 2019 - 11:41

Bank of Ireland raised €300 million on Monday through the sale of junior bonds, securing demand for more than three times the amount of debt on offer.

The bank had originally tried to sell the bonds at the beginning of September but pulled the sale at the 11th hour because of a disappointing level of demand, with investors rattled over Brexit tensions.

The so-called Tier 2 bonds, which are due to mature in 10 years’ time, were priced to carry a coupon, or interest rate, of 2.375 per cent.

“We were particularly encouraged by the strong demand from international investors with interest from across the UK, Continental Europe and North America,” said Sean Crowe, chief executive of Bank of Ireland’s markets and treasury unit.

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It comes after rival AIB last week sold €500 million of so-called additional Tier 1 (AT1) notes, a riskier category of bonds than the ones Bank of Ireland has sold.

Irish bank shares have also gained since last month's postponed deal, paring this year's declines, on optimism the UK will avoid a no-deal departure from the European Union, thereby lessening risks to Ireland's economy.

Investors placed €340 million of orders in Bank of Ireland’s postponed sale last month. The bank said at the time that it delayed the deal to “ensure successful execution for both the issuer and investors.”

The so-called Tier 2 subordinated notes that the bank is seeking to sell will form part of its capital base, ranking below the company’s senior notes but ahead of its equity reserves.

The lender hasn't been alone in cancelling debt sales due to challenging market conditions. Toward the end of September, UK-based Metro Bank had to pull a £200 million bond sale having received poorer interest than anticipated. – Additional reporting, Bloomberg

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