Boi bond sale.

ranger4

Bank of ireland has set terms for a 2 billion euro bond sale which will be backed by gov guarentee, the demand for bond sale had topped 3.5 billion, along with boi aib also is seeking 2-3 billion with bond sale, question will the boi and aib bond sales inject enough capital to stop the government forcing the banks to except shotgun mergers along with muted hedge funds taking large stakes in aib and boi thus dilluting exsisiting shareholders stock? or will proposed bond sales not raise enough capital for banks on its own.

ranger4

Any views with info?

pocketdooz

ranger4 wrote: »

Any views with info?

We've been expecting it to happen since the government guarantee was put in place.

You would expect that it will just refinance some of their shorter maturity debt.

It's not like it will be a substitute for fresh equity capital.

Means nothing really

woodseb

simply put the banks need more Tier 1 capital which is capital that cannot be recalled from the bank - issuing additional debt doesn't improve that capital although it allows the banks to be liquid and lend

ranger4

woodseb wrote: »

simply put the banks need more Tier 1 capital which is capital that cannot be recalled from the bank - issuing additional debt doesn't improve that capital although it allows the banks to be liquid and lend

Its reported that a number of investment firms have put a plan forward to co-invest with private and large pension funds investment firms to raise banks tier 1, would such a plan greatly dilute exsisiting shareholders stock values.

woodseb

any new issue of equity will dilute current shareholders - nobody knows by how much yet and it is likely that much of it is already priced in to the stock

pocketdooz

woodseb wrote: »

any new issue of equity will dilute current shareholders - nobody knows by how much yet and it is likely that much of it is already priced in to the stock

You also need to examine who will control the board afterwards

If it's the govt. then my faith in the ability of BOI to make extraordinary profits going forward will fall to zero.

ranger4

pocketdooz wrote: »

You also need to examine who will control the board afterwards

If it's the govt. then my faith in the ability of BOI to make extraordinary profits going forward will fall to zero.

Pocketdooz, If the latest proposed plan by aib il&p and boi investment subsidiaries allong with possible pension funds injection by gov are used to recap banks would this plan be possitive for banks and exsisiting shareholders rather than the other jc flowers and vc investors plan to re-cap the banks.