Bank of Ireland has sold its debut asset-covered bond to more than 130 investors in 23 countries, with the €2 billion offering more than three times oversubscribed.

The bond, which is backed by a pool of 20,000 Irish mortgages, forms part of a €10 billion fund-raising planned by Bank of Ireland over the next five years. The bank is raising the money to help pay for future lending growth.

The bond, which is being managed by Bank of Ireland's Global Markets division, is the first such security in the Republic to be backed by mortgages. Two IFSC-based banks - Depfa and West LB - have issued similar structures but theirs are backed by public-sector debt. The asset-covered securities (ACS) market is appealing because it costs less than other routes to funding.

Bank of Ireland Global Markets chief executive Mr Mick Sweeney said yesterday that the bank was "pleasantly surprised" at the level of demand the ACS had attracted, particularly in Asia.

Slightly more than 10 per cent of investors came from Asian locations such as Tokyo and Beijing, with the bond's AAA credit rating holding particular appeal in these markets.

About 40 per cent of investors, who included mainly fund managers, central banks and other financial institutions, were based in Germany, where ACS-type structures have been popular for generations.

Mr Sweeney said the offering was more than three times oversubscribed within three hours of the book being opened.

It was priced at mid swaps plus three basis points, thus effectively allowing Bank of Ireland to raise funds more cheaply than the Irish Government.

Mr Sweeney expects the Irish ACS market - currently worth €23 billion - to blossom over coming years as more issuers tap into this type of funding.