The ESB has completed the largest ever private placement deal by a company based in the Republic with $1 billion (€811 million) fund raising arranged via two major international banks.

The company said an average interest rate of 5 per cent applied to the various loans involved. The utility originally planned to raise about $500 million but increased the offering in response to strong demand from investors. "The very positive response is a sign of the high regard in which the company is held internationally and is also a vote of confidence in the Irish economy," said ESB chief executive Mr Padraig McManus.

He explained that the ESB historically raised its funds via bank debt, but the terms for these loans were not very attractive at the moment, often no more than five years. He said the company might raise further funds via the bond market, however.

The company said the private placement was achieved without an official credit rating. Chairman Mr Tadgh O'Donoghue said the investors knew the ESB's fundamentals were sound and were also aware of the strength of the Irish economy over recent years.

The money will be mainly used to renew the ESB's network and build new plants. Mr O'Donoghue said a decision also had to be made about the coal fired power station at Moneypoint in Co Clare. Upgrading this plant could cost up to €250 million, he pointed out.

After the announcement of the fund raising, questions were also asked about various unrelated issues. In relation to threats of strike action by some union leaders, Mr McManus said he expected difficult issues to be tackled as part of "partnership process". On the issue of potential blackouts he said the supply of electricity remained tight, but he refused to blame the ESB for the problem.