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Sept. 13, 2017, 1:52 a.m.
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€750m ireland gretchen friemann september bank investors

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Gretchen Friemann

September 13 2017 2:30 AM

Investors swamped Bank of Ireland's first issuance of some €750m worth of junior bonds from its new holdco structure, underlining the red-hot demand for yield in an environment where long-term interest rates are at rock bottom.

The lender sold £300m of junior notes at a yield of 3.2pc and $500m at a rate of 4.2pc, a move necessitated by new regulatory measures aimed at limiting the impact of a banking collapse on retail customers.
Bank of Ireland established the new holding company earlier this year after shareholders supported the restructuring at an emergency general meeting.
AIB must also overhaul its corporate structure to comply with the new rules. The bank is expected to convene an EGM within the next two months and will establish a separate holding company in early 2018 at the latest.
Bank of Ireland was inundated by investor demand with the US dollar-denominated note attracting $5.4bn worth of demand, according to sources.
A total of £1.4bn worth of bids were submitted for the pound sterling bond.
The heavy demand helped deliver low yields for paper rated as relatively riskier to top-notch credit. Both bonds expire in 2027 and are callable in five years.
Bank of Ireland called in five joint bookrunners to orchestrate the deal, BNP Parisbas, Citi, Davy, Morgan Stanley and UBS. A wave of similar issuances are expected as the lender meets requirements known as the MREL rules.
Bank of Ireland is forecast to issue up to €5bn in the next few years while AIB is likely to issue between €3bn and €5bn.