BANK OF IRELAND raised €250 million in a sale of subordinated bonds yesterday, its first venture back into the markets since the crisis began.

The bank said the successful sale was a vote of confidence by investors. The debt, which has a 10-year maturity, is not covered by the State’s guarantee.

Owen Callan, a senior strategist at Danske Bank Markets, said the issuance is “another positive sign of how the banking system is inching out of the crisis and regaining market access”.

“Markets will regard this as the first genuinely ‘new’ issuance of subordinated debt by the Irish banks since the crisis began, and probably the first since as far back as 2005,” he continued. “Given that this class of bond suffered significant losses during the crisis and was not protected by the Irish government, it’s encouraging that investors are willing to get involved in this market once again.”

However, he added the coupon of 10 per cent used “to attract investors is indicative of the still fragile nature of the Irish banking system”.

The sale comes just weeks after the bank raised €1 billion with the issue of three-year bonds. Although also not covered by the State guarantee, the subordinated debt put up yesterday is riskier than the longer issue, covered bonds which are backed by assets.

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