Bord Gáis has raised €375 million in fresh finance following a private placement in the US market. The company's borrowings now top €1 billion, but Bord Gáis executives have described the debt levels as standard for an "asset intensive business".

The company said the private placing had been approved by the Government.

Using its Standard & Poor's credit rating, the company relied on Royal Bank of Scotland as its agent to raise the funds. The participants are mainly insurance companies and pension funds.

The money will be used to fund various capital investment projects and to increase the capacity of its network.

The raising of the finance in the US signals a shift in the company's debt management strategy.

According to the 2002 annual report, a significant number of the company's loans were short-term facilities, however the company has moved toward longer-term credit options since then. The US loans mature at between seven and 12 years, for instance.

The company's group treasurer, Mr Paul Kelly, said Bord Gáis was not breaking Government borrowing limits which were set at about €1.7 billion. He said the company's debt to total capitalisation ratio of 55 per cent was normal for a gas or utility company.

He said the company's track record and public ownership allowed it to acquire a high credit rating from agencies like Standard & Poor's and Moody's. He said the US private placement market was particularly attractive right now with rates far lower than available in the European bond market.

In 2000/2001, Bord Gáis raised €377 million from the European Investment Bank.

Earlier this year it raised €500 million in five-year loans from a bank syndicate. The arrangers were AIB, Bank of Ireland, BNP Paribas and Citigroup. The facility was 50 per cent oversubscribed. It was made up of a €250 million term loan and a €250 million revolving credit facility. The revolving credit can be drawn and repaid on an ongoing basis, while the term loan is fully utilised.

Bord Gáis is in a major expansionary phase with the gas market due to open completely in 2005. Pre-tax profits rose last year from €89 million to €114 million, with group turnover rising to €652 million from €571 million.

In line with the growth in profits, the company's level of debt has risen significantly. In 1998, the company had €143 million of debt but this has now risen to more than €1 billion. A significant amount of money is being spent on the company's pipe network.

In the 2002 annual report and accounts, the chief executive of the company, Mr Gerry Walsh, said the Commission for Energy Regulation allowed the company to earn a 6.5 per cent after-tax return on its regulated pipe network. Third parties who use this network must pay a charge.