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The announcement this month that Bank of Ireland is to join DEPFA Bank and WestLB in issuing asset covered securities is a welcome development for this new market, which continues to go from strength to strength. (See page 1)
Bank of Ireland is the first institution to issue mortgage backed covered bonds, as both DEPFA and WestLB issue public sector loans backed bonds.

The Irish Mortgage and Savings Association (IMSA) was one of the key contributors to the Irish pfandbrief project, which resulted in the Irish Asset Covered Securities Act of 2001, and it must feel gratified that the first mortgage bond will be issued this year.

Fergus Gillen of McCann Fitzgerald recently commented that this act is now seen by many industry players as being ‘the benchmark for European covered bond legislation’. Indeed this theory is borne out in Barclays Capital’s (who will arrange Bank of Ireland’s ACS issues) latest research on the European covered bond market, which shows that Ireland has leapt into third position for issuance year-to-date, behind Germany and Spain. This is a remarkable achievement by all involved, as the first Irish covered bond was only launched in February 2002.

As new issuers such as Ireland, and the UK continue to gain ground, Germany’s days as the dominant covered bond or pfandbrief issuer now look to be over. In 2001, Germany’s share of the European jumbo market was 77 per cent, declining to 42 per cent in 2003, and 29 per cent so far this year. Ireland’s share continues to grow up to 18 per cent so far this year from 9 nine per cent last year, and if the market grows to €50 billion, as Barclays Capital predicts, it will consolidate its position as one of the top European jumbo covered bond markets.

Corporate finance
In this month’s issue the annual FINANCE M&A Deal Directory is published (See page 4). One of the most notable deals included in this year’s directory is eircom’s return to public company status.
This is a welcome boost to Ireland’s capital markets particularly to the Irish Stock Exchange and Dublin’s stockbroking community, coming as it does after an almost four year drought from the last IPO.

There is expectation that another company may go public by year-end, with the Irish Stock Exchange forecasting another two deals over the course of the year. Possible candidates include Aer Lingus and, following in eircom’s footsteps, Jefferson Smurfit, whose take private by Madison Dearborn in 2002 won last year’s ‘Deal of the Year’ Award.

Overall the directory shows deal volume in the Irish M&A market was down over the past 12 months, with the average size of deals also considerably smaller than in last year’s directory, when there were three deals over the €1 billion mark. This year only eircom is in that category.

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