DUBLIN: Bank of Ireland has raised €750m through a five year covered bond at a yield of 0.527%. Demand for the bond was worth €1.6bn.
We are not surprised by the positive market reaction to this sale,” said Investec chief economist, Philip O’Sullivan. The yield on existing Bank of Ireland covered bonds dropped to a low of 0.54% this week, he added.
Covered bonds are backed by Bank of Ireland’s residential mortgages. The value of the bonds have been boosted by their inclusion in the ECB’s asset-backed securities programme. The price of the bond was 20 basis points over mid-swaps, which compares very favourably to the 80 basis points over mid-swaps achieved last march for a similar €750m covered bond.
Merrion Capital senior credit analyst Ciaran Callaghan said the move would improve Bank of Ireland’s net interest margin.
