Bank of ireland said to near sale of $1.6 Billion secured bond

Bank of Ireland Plc, the nation’s largest bank by assets, is close to a private sale of bonds secured on U.K. residential mortgages, according to two people with knowledge of the matter.

The Dublin-based lender may raise about 1 billion pounds ($1.6 billion) of funding in the accord, according to one of the people, who declined to be identified, as talks are not complete. A deal may be agreed within weeks, subject to market conditions, the two people said.

While Irish banks have been locked out of public debt markets since before the country’s bailout in November, Bank of Ireland has raised about 2.9 billion euros ($3.9 billion) of term debt since June, using U.K. residential mortgage assets as security. The debt, which wasn’t state guaranteed, had an average duration of 2.2 years and was priced at 265 basis points over three-month Euribor, the benchmark rate at which European banks lend to each other in euros for three months.

“We anticipate doing more” unguaranteed, secured term funding “by the end of the year,” Richie Boucher, the lender’s chief executive officer, told lawmakers at a parliamentary committee hearing on Sept. 14. A spokeswoman for the bank declined to comment on any upcoming debt sales.

Bank of Ireland raised about 4 billion euros of equity capital this year. Some 3.7 billion euros of this was generated privately, leaving it alone among the country’s six largest lenders to avoid majority state ownership.

Irish Life & Permanent Plc said Aug. 31 it had raised 1.4 billion pounds of funding secured against its U.K. home loans book, while Allied Irish Banks Plc Executive Chairman David Hodgkinson told lawmakers Sept. 14 that the lender is “preparing for a possible issue later this year in respect of some covered debt.”