UPDATE 1-Bank of Ireland to boost capital buffers with Tier 2 bond

Tue Jun 3, 2014 9:50am EDT

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By Aimee Donnellan

LONDON, June 3 (IFR) - Bank of Ireland is preparing to boost its capital reserves with the sale of a euro-denominated Tier 2 bond - its first since December 2012.

The deal will be a 10-year non-call five and could emerge as early as Wednesday provided market conditions are suitable, according to a banker close to the situation.

"If feedback allows we will print this deal as soon as it's ready," said a lead managing banker.

The bond offering is expected to be rated B by S&P and will be managed by BNP Paribas, Davy, Deutsche Bank, Morgan Stanley and UBS.

"Conditions are pretty good as the appetite for Tier 2 debt has been really strong as we have seen from deals like Standard Chartered."

Standard Chartered received over £2.25bn orders for a £900m 20-year Tier 2 bond offering earlier on Tuesday as investors rushed to get their hands on longer-dated subordinated debt.

Bank of Ireland, the only Irish lender to escape nationalization, is likely to benefit from the fact that it has been on an upward trajectory since it returned to the public debt markets, with a covered bond, in 2012.

Since then it has sold senior debt, a 250m 10% Tier 2 bond, and the Irish government sold to investors the Bank of Ireland CoCos it owned.

More recently the bank raised 580m through a share sale that was part of a milestone deal to repay 1.9bn to the state, handing the government a timely financial boost.

Bank of Ireland escaped falling into full state control after the last stress tests, when a group of North American investors led by Wilbur Ross and Prem Watsa bought a 35% stake just months after Ireland was bailed out. (Reporting by Aimee Donnellan, editing by Julian Baker, Alex Chambers)

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