Bank of Ireland (BofI) has hired five international banks to test the water for a debt-raising through a public sale of a covered bond backed by Irish residential mortgages – its first public sale since October 2010.

Citigroup, Morgan Stanley, Nomura, Royal Bank of Scotland and UBS will test investor appetite for the bank’s covered bond. A conference call with investors will take place today.

The proceeds from any debt raised will go towards reducing the bank’s borrowings from the European Central Bank, which stood at €28 billion in June.

The covered bond – which will not be covered by the bank guarantee – is the first public sale of debt by the bank since October 2010, the month before the State’s bailout, when it borrowed €750 million by selling a Government-guaranteed bond. The debt-raising is seen a step in the bank’s return to wards normalised funding.

BofI has raised funding privately from investors, raising €4 billion of unguaranteed debt last year using its UK mortgages as collateral. Prior to that, the last covered bond sold by the bank was a €1.5 billion debt raising for five-year loans in September 2009. The bank also raised €1 billion of secured unsecured unguaranteed debt that month.

BofI gained a tenth of a cent to 9.3 cent in trading yesterday.

It will issue a trading update to the market today.