STATE-OWNED Anglo Irish Bank is sounding out investors in the debt markets with a view to raising about €2 billion on a five-year bond issued under the Government’s extended bank guarantee.

This would be the first time the bank has tapped the bond markets since the introduction of the extended guarantee last December.

Anglo is planning to complete the bond sales this week.

The bank is planning to sell two five-year bonds through a syndicate of banks including JP Morgan Chase and Société Générale.

Last week, Anglo confirmed in its results for the 15 months to the end of December 2009 that it would seek to raise funding under the extended guarantee, which covers bonds of up to five years.

“The group will shortly begin sourcing longer-term funding under the Eligible Liabilities Guarantee which was announced in September 2009,” the bank said.

All the domestic institutions, with the exception of Anglo and Irish Nationwide Building Society, have raised funding using the extended guarantee. AIB, Bank of Ireland, Irish Life Permanent and EBS have raised more than €13 billion under the scheme.

The institutions have about €25 billion of funding falling due at the end of the blanket guarantee on September 29th, 2010.

Anglo raised €7.4 billion of senior debt under the blanket guarantee in its 15-month financial period. Some €15 billion of senior debt was owing last December.

Meanwhile, high-level talks between Anglo and Quinn Group and its lenders – more than 20 bondholders and eight Irish and UK banks – are continuing in a bid to find an alternative to the administration of Quinn Insurance ahead of a court hearing next Monday.

The syndicate of banks is being represented by Dublin law firm Arthur Cox and London lawyers Clifford Chance, while the bondholders are represented by Maples Calder and London law firm Bingham McCutchen. London-based FTI Consulting has been reviewing the Quinn Group for the bondholders as part of the renewal of their loans to the group.