Bank of Ireland to Swap $2 Billion of Junior Notes
                         December 08, 2010, 12:28 PM EST                                                  
                                                                                By John Glover                     
                                              (Adds analyst comment in fourth, eighth paragraphs.)
      Dec. 8 (Bloomberg) -- Bank of Ireland Plc, the  nation’s biggest lender, offered to swap subordinated bonds at a premium  to the market rate as it seeks to bolster its capital.
      The bank will exchange as much as 1.5 billion ($2  billion) euros of its lower Tier 2 bonds for new, 6.75 percent state-  guaranteed notes in euros and pounds due 2012, according to a statement.  The tenders will be at 46 percent to 57.5 percent of face value, a  capital gain of as much as 450 million euros to go toward the 2.2  billion euros being demanded by regulators.
      Ireland is preparing legislation to force  subordinated bondholders to “share the burden” of bailouts with  taxpayers. Lenders in distress including Lloyds Banking Group Plc have  used buybacks to raise capital, and Anglo Irish Bank Plc offered 20  cents on the euro for its subordinated debt.
      “As it stands, there is no real ‘stick’ being  used to entice bondholder participation,” Glas Securities Ltd. analysts  in Dublin said in a note today. “The details of the legislative changes  next week could encourage higher participation.”
      The Dublin-based bank is tendering for nine securities in total, according to the statement.
      It’s offering 51 cents on the euro for the 420  million euros of 4.625 percent notes due 2019 still outstanding, which  rose to 48.33 cents today from 44.75 cents yesterday, Bloomberg  composite prices show. It will pay 48 cents for its 158 million euros of  floating-rate notes due 2017, securities quoted at 44 cents today.
      Bank of Ireland will pay as little as 46 cents on  the euro for its $327 million of floating-rate notes due 2017 and  callable in 2013. These rose 4.75 cents today to 42.25 cents, composite  prices on Bloomberg show.
      “It will come as some relief to investors that a  coercive, more penal approach has not been adopted,” according to Glas.  Bank of Ireland will still need as much as 1.8 billion euros of capital  after the exchange, meaning “more self-help capital will be required if  avoidance of majority government ownership is still an objective.”