UPDATE 1-Bank of Ireland sells new 500 mln euro bond

Fri Mar 15, 2013 12:43pm EDT

* Bond follows landmark sovereign issue on Wednesday

* 5-year covered bond attracts 2.25 bln euro in orders

DUBLIN, March 15 (Reuters) - Bank of Ireland sold 500 million euro ($649 million) worth of 5-year bonds on Friday as it capitalised on the positive sentiment towards Ireland following a landmark five-billion euro sovereign issue earlier this week.

The bank's issue was significantly oversubscribed, attracting orders of over 2.25 billion euros ($2.9 billion), Bank of Ireland said in a statement.

Ireland took its biggest step yet towards exiting its EU/IMF bailout on Wednesday by issuing its first benchmark 10-year bond in three years to meet nearly all its funding needs through next year.

Bank of Ireland, which is 15 percent owned by the state, on Friday followed suit by opening the books on a covered 5-year bond backed by Irish residential mortgages.

Order books closed within 30 minutes after demand allowed the issuers to lower the price to mid-swaps plus 190 basis points from an initial guidance of plus 210 basis points, Bank of Ireland said.

The only Irish lender to avoid full-state control, Bank of Ireland raised 1 billion euros ($1.3 billion) in November in its most significant bond issue in over three years.

Bank of Ireland's main domestic rival, state-owned Allied Irish Banks, followed it later that month by raising 500 million euros through a three-year covered bond issue.

The government in January sold 1 billion euros it held in Bank of Ireland debt.

Like all Irish lenders, Bank of Ireland is battling to return to profitability. It reported a 40 percent drop in underlying profit for 2012.

Bank of Ireland said it had mandated Deutsche Bank , Morgan Stanley, Natixix and RBS to lead manage the issue.

A couple walks along the rough surf during sunset at Oahu's North Shore, December 26, 2013. REUTERS/Kevin Lamarque

Find your dream retirement town

Florida? Hawaii? Reuters has teamed up with Zillow to give you the power to customize a list of your best places to retire.  Video | Full Article