Bank of Ireland has kick-started the Irish mortgage backed covered bond market in spectacular fashion with a €2 billion issue that was over three times over-subscribed.
Following a two week roadshow, which saw the bank travel the globe presenting to 200 potential clients, the order book for the bond was opened on Monday, September 13th and closed, due to substantial demand, at 11 o’clock on that same day. The bond, which was issued by BOI’s subsidiary, Bank of Ireland Mortgage Bank, was priced at mid-swap + 3 basis points, and will be quoted on the Euro MTS system. It has a preliminary rating of AAA by Standard & Poor’s and Moody’s. The proceeds of the deal will be used for ongoing funding of the BOI Group.
According to Mick Sweeney, chief executive of Bank of Ireland Global Markets, 10 per cent of the bond was placed in Asia, 68 per cent in mainland Europe, 8 per cent in Ireland, 4 per cent in the UK and 10 per cent in Scandinavia. ‘We had interest from well over 20 countries worldwide with a wide variety of quality investors ranging from Central Banks to pension funds to fund managers’, Sweeney said.
He said that the bank received very favorable feed back on the Bank of Ireland brand, the Irish legislation that’s underpinning the product, as well as the reputation of the Irish economy. The speed, size, quality and breadth of the subsequent order book were a clear demonstration of this feedback.
BOI is the first Irish mortgage institution to enter this market, which is the world’s second largest fixed income market behind government bonds, and the fastest growing, but Sweeney says that he expects other issuers will now enter the market. Legislation establishing the market was passed in the form of the Asset Covered Securities Act 2001, and to date two other issuers, DEPFA Bank and WestLB have issued on the public sector side. Barclays Capital, the arrangers of the deal, says that the market has the potential to grow to €50 billion.
Citigroup, Davy Stockbrokers and Deutsche Bank acted as joint leads to the deal, and BOI appointed Mazars, the Dublin based professional services firm, as the covered asset monitor. |
