Ireland sells 500 million euros of debt to investors

DUBLIN - Reuters

A successful sale of debt in Bank of Ireland is a sign of recovery for Ireland.

Ireland is selling at least 500 million Euros ($653 million) of debt in Bank of Ireland to private investors, cutting its exposure to the bailed-out bank amid growing confidence in the country’s economic recovery.

The private investors, including some existing stockholders, have agreed to take at least half the 1 billion euros of contingent capital notes, known as CoCos that the state has held since a sector-wide recapitalization in 2011 the bank said in a statement.

The government currently holds 15 percent of Bank of Ireland, the only Irish lender to avoid full state control after the country’s property market crash.

The Finance Minister Michael Noonan said in a statement that he was delighted to announce the proposed sale, adding that it represented another vote of confidence by international investors in Ireland’s recovery and the government’s banking policies. A group five North American investors bought a 35 percent stake in the bank 18 months ago. The announcement comes a day after Ireland sold 2.5 billion euros ($3.3 billion) of debt, raising a quarter of the 10 billion Euros it aims to borrow in 2013 ahead of a planned exit from its EU/IMF bailout.

The government said yesterday that its successful exit from a large portion of the capital notes in Bank of Ireland, which also returned to bond markets last year to raise 1 billion Euros, would represent another step in the normalization of Ireland’s banking sector.

The contingent capital notes, which mature in July 2016 and pay a coupon of 10 percent, convert into equity in the bank if its core tier one capital ratio falls below 8.25 percent. Davy, Deutsche Bank and UBS have been mandated to manage the placement and Ireland’s finance department said the deal follows an approach by investment banks late last year, which indicated that there was sizeable investor interest in the notes.