ESB sells €500m of bonds to refinance more expensive debt

ESB sold €500 million of bonds in the market on Tuesday as it lines up resources to refinance more expensive borrowings that fall due this year.

The State-owned energy group said it had received more than €1 billion of orders for what is the first 12-year bond to be issued in the euro-zone corporate bond market so far this year. The new bonds were price to carry an annual interest rate, or coupon, of 1.75 per cent.

Some €300 million of bonds fall due in September. The securities were sold in 2012, when the State was in the middle of the troika bailout, with a coupon of 6.25 per cent.

"The successful bond placement enables ESB to refinance borrowings that are due to be repaid this year, and also helps us to extend the average maturity of our long-term debt portfolio at competitive rates, which is used to fund critical electricity infrastructure," said the company's finance director, Pat Fenlon.

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The bond sale was managed by Barclays, JP Morgan, Royal Bank of Canada and Société Générale.

Davy analyst Joseph McGinley said demand and the pricing of the bonds have benefited from the fact that they are eligible for the European Central Bank’s ongoing €2.3 trillion quantitative easing bond-buying programme.

“Bond investors [also] favour the regulatory certainty of the networks business in Ireland, fostered by the Commission for Energy Regulation, which in turn allows ESB to benefit from ever-lower funding costs,” Mr McGinley said.