Bank of Ireland Mortgage Bank attracted Eu2.5bn of demand for a Eu500m no-grow five year issue today (Friday), which was launched on the back of a positive outcome on Wednesday to the sale of the first Irish government benchmark since the country’s 2010 bail-out.

Bank of Ireland

Leads Deutsche Bank, Morgan Stanley, Natixis and RBS set initial price thoughts in the 200bp-210bp over mid-swaps area, guidance at 195bp over and tightened the spread to a re-offer of 190bp over.

The order book reached Eu2.5bn, according to a lead syndicate banker.

The deal came flat to the Irish government bond curve, he added, citing an October 2017 trading at 187bp over mid-swaps and an October 2018 trading at 195bp as comparables.

A syndicate banker away from the deal said that it was the tightest level achieved versus Irish government bonds by an Irish issuer since they returned to the covered bond market in November.

According to the lead syndicate banker, comparables taken into account for the transaction were outstanding Bank of Ireland issues, a 2014 trading at 155bp over mid-swaps and two 2015s trading at 165bp over mid-swaps.

Bank of Ireland (BoI) reopened the Irish covered bond market after three years without supply in November, when it launched a Eu1bn three year issue that was priced at 270bp over mid-swaps and attracted Eu2.5bn of orders. After that, fellow Irish issuer AIB Mortgage Bank launched two well received Eu500m three year issues, one in November that was priced at 270bp over mid-swaps and one on 22 January that was priced at 185bp over.

BoI’s deal was prompted by the positive outcome to a sale of the first Irish government bond benchmark since the 2010 bailout, according to syndicate bankers. Ireland collected over Eu5bn of funding with 10 year bonds priced at 240bp over mid-swaps on Wednesday.

“The sovereign action was a success, and the bonds have now tightened some 10bp in the secondary market,” said a syndicate banker away from the leads.

BoI’s five year issue was the longest dated covered bonds since the reopening of the Irish covered bond market. A syndicate banker away from the leads said that trying to extend the maturity to five years was a positive move for BoI.

The lead syndicate banker said that Irish issuers are looking to expand their curves and the five year maturity was a “natural step” in this direction.

Syndicate bankers away from the leads said that the result was a good achievement and showed renewed investor demand for Irish covered bonds and the rehabilitation of the country after the crisis.