ESB borrows €600m in five-year bond

STATE ENERGY company the ESB borrowed €600 million from European institutions yesterday to refinance existing bank debt and credit facilities.

In a statement the group confirmed it had successfully raised €600 million from European financial institutions in a five-year bond with an interest rate of 6.25 per cent.

“The bond issue will support ESB in funding its ongoing capital investment programme,” the statement said. “The proceeds from the bond issue will also be used to refinance some of the group’s existing debt. In that context it supports ESB’s liquidity position and demonstrates the group’s continued financial strength.”

The ESB will use part of the money to pay off bank debt that is due to be repaid in 2014 and to cover part of its revolving credit facilities.

The State company is getting a slightly more favourable interest rate as a result of the refinancing. Yesterday’s bond was priced at 6.25 per cent compared with 6.5 per cent for existing debt.

The ESB had net debts of €4.4 billion at the end of 2011, according to its last annual report. Some of its existing bond debt is due for repayment at the end of next year.

The group last went to the bond markets in mid-2010. Last year its subsidiary, Northern Ireland Electricity, borrowed money from international investors through its own bond issue.

National Irish Bank described the State company’s bond issue as a “huge success, with almost €3 billion in orders, and a host of international real money accounts involved”. It added that it was the follow through into the quasi-sovereign and corporate sector which the Government had been hoping for when the State raised €5.2 billion from international capital markets.