State-owned energy group Bord Gáis will use the €500 million it raised through yesterday’s bond issue to refinance part of its existing debt. The company yesterday borrowed €500 million from more than 400 European financial institutions through a bond sale.

According to its head of finance, the company will pay a rate of 3.625 per cent on the bonds, which will be repaid in five years. The rate is far below the 5.75 per cent at which its last bond sale, in 2009, was priced. The company raised €550 million at that point.

Bord Gáis received €6.5 billion worth of orders within an hour of beginning the bond sale yesterday morning.

Mr O’Sullivan said the offer was 13 times oversubscribed. “That’s very unusual.Normally it’s four or five times, maybe six,” he said.

He suggested that the positive response, coming so quickly after similar moves by the National Treasury Management Agency, ESB and Bank of Ireland, demonstrated that international markets were regaining confidence in Irish companies and the Republic.

The money will be used to repay the 2009 issue, which is due to mature in 2014. The company announced a tender to repurchase this bond which will remain open until next Tuesday.

Mr O’Sullivan said the gas board had calculated that the exercise would reduce its interest burden by one to two basis points, that is, tenths of a per cent. The group’s total debt is €2.2 billion.

While the issue was well received everywhere, Mr O’Sullivan said there was particular interest from German and Swiss institutions. “They are perceived to be a bit negative towards Ireland, but actually the response from there was very positive.”