Permanent TSB to bring Ireland's first CoCo next week

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By Alice Gledhill

LONDON, April 16 (IFR) - Permanent TSB Group will become the first Irish bank to issue Additional Tier 1 bonds as soon as next week, part of a broader capital-raise undertaken by the institution.

The issuer has mandated Deutsche Bank (Xetra: 514000 - news) as structuring adviser and coordinator, along with Davy as joint lead manager (no books) for the potential bond.

Meetings will take place in London along with an investor conference call on April 21.

"It's not a straightforward situation compared to other banks and they are still in a restructuring situation, but it will sell and this will not be a club deal," said a source close to the transaction.

The bond will convert into equity if PTSB's Common Equity Tier 1 ratio falls below 7%. The lender's CET1 ratio was 14.2% on a transitional basis at the end of 2014.

The announcement comes shortly after the bank launched a 400m public share offering on Tuesday - the first by an Irish lender since the financial crisis - which will cut the government's stake to at least 75%.

The AT1 bond will help PTSB fill a capital shortfall identified last year when it was the only Irish bank to fail European stress tests.

Irish banks have sold deeply subordinated debt before, the most notable being the remarketing of Bank of Ireland (Other OTC: IRLD - news) preference shares in late 2013. (Reporting by Alice Gledhill, editing by Helene Durand, Julian Baker)