Bank of Ireland has raised €2 billion in its second Asset Covered Security (ACS) in a deal which was twice oversubscribed, with the global order book reaching €4 billion. The issue is part of a fundraising programme from which the bank plans to raise up to €10 billion over the next four to five years.
The deal was sold to over 210 investors from more than 20 countries, and the final allocation of investors includes 30 per cent from Ireland and the UK, 53.5 per cent from Continental Europe, 7.5 per cent Scandinavia and just under 9 per cent from Asia. The bond was priced tight at the tight end of the price guidance at mid swaps plus 6 basis points, with a 10 year maturity, and it has a preliminary rating of AAAAaa, by Moodys Investor Services and Standard & Poors. BOI intends to have the securities listed on the Irish Stock Exchange on completion. Barclays Capital, Davy, Dresdner Bank and IXIS Corporate and Investment Bank were joint lead managers on the transaction.
To date, Bank of Ireland is the only mortgage backed covered bond issue to have emerged since the legislation was introduced in the 2001 Asset Covered Securities (ACS) Act. Last September it launched its inaugural €2 billion issue.
Based on the success of its first two issues, Mick Sweeney, chief executive, Bank of Ireland Global Markets said, ‘We look forward to tapping into the demand for our product through further benchmark issues over the coming years as well as tapping the private placement market.
Bank of Ireland’s covered bond programme allows private placement issues in different currencies, provided that the bank meets the requirements set out in the legislation to hedge its currency risk.
Last month, Depfa Bank, the most active issuer in the Irish covered bond market, launched a $1.25 billion five-year asset covered security. The issue of a USD-denominated covered bond is designed to further expand DEPFA BANK’s worldwide investor base, and Depfa expects the proportion of USD issues to grow in the years to come.
The 5-year issue had a coupon of 4.25 per cent, and the re-offer price of 99.574 per cent gave a spread of 43bp over the UST 4 per cent due April 2010. Goldman Sachs, HSBC and Morgan Stanley were joint book-runners on the transaction. Fifty-three per cent of the issue went into Asia, 21 per cent into Europe and 26 per cent into the US. There was again a high participation from central banks and asset managers in the transaction.
This is the second issue of Depfa’s benchmark funding programme in 2005, and Depfa is planning in the region of €20 billion of long term funding in 2005, of which at least €8 billion will be in the form of benchmark covered bond issues.
The other covered bond issuer, WestLB Covered Bank, has yet to issue this year. |
