DUBLIN, Nov 28 (Reuters) - Allied Irish Banks started taking orders on a 500 million euro ($646.55 million) three-year bond on Wednesday, building on a resurgence in Irish capital markets.
Hoping to emulate the debt market success of peer Bank of Ireland earlier this month, AIB started marketing the paper on Wednesday in the area of mid-swaps plus 200bp, IFR, a Thomson Reuters unit, reported.
AIB, was once Ireland’s biggest lender until it was 95 percent nationalised in September 2010. Since then Irish banks have been shut out of the capital markets and relied on ECB funding.
Bank of Ireland’s three-year covered bond, which reopened the country’s bank debt market in mid November, was used as a reference for pricing.
BoI’s 1-billion-euro three-year deal was another watershed moment for financial institutions from the eurozone’s periphery keen to wean themselves off ECB liquidity at affordable rates.
According to a banker involved in the deal, at 1030 GMT the execution process was nearly complete, adding that AIB is opting to sell a smaller offering than BOI.
“We’re now going to come flat to where Bank of Ireland priced which is a great result,” he said. “AIB is a more challenging name and so it makes sense not to match BOI.”
Irish banks and corporations have been cementing their path to rehabilitation over the past month which has resulted in a number of transactions.
Ireland’s Electricity Supply Board (ESB) raised 500 million euros worth of seven-year debt that attracted around 6 billion euros of demand in mid November and was followed up by Bord Gais Eireann that sold five-year debt that was 13 times subscribed.
The Irish government has also capitalised on a sharp fall in its borrowing costs by launching two bond swaps, its maiden amortising bond issue and new long-term debt sales, in a bid to position itself to exit an 85 billion euro EU/IMF bailout on schedule next year. ($1 = 0.7733 euros) (Reporting by Aimee Donnellan, IFR Markets, Editing by Lorraine Turner and Louise Heavens)