Wednesday 7 December 2016

ESB to save millions in interest as it issues €600m bond

Published 02/06/2016 | 02:30

The ESB's finance arm is partially redeeming existing bonds that fall due in both 2017 and 2019
The ESB's finance arm is partially redeeming existing bonds that fall due in both 2017 and 2019

The ESB is set to save millions of euro in interest on its bonds as it launches a tender offer to redeem €300m of outstanding notes. The company issued a new €600m bond yesterday.

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The semi-state company confirmed that it successfully placed a €600m fixed-rate bond that matures in 2031.

"The 15-year bond priced today will have a coupon of 1.875pc, and so allows ESB to refinance part of its existing 2017 and 2019 maturities at competitive rates, extend and smooth out the maturity of its long-term debt and fund critical electricity infrastructure for the benefit of its customers and the Irish economy," a spokesman said yesterday.

That new bond has been issued under the ESB's existing, €3bn, medium-term note programme.

The ESB's finance arm is partially redeeming existing bonds that fall due in both 2017 and 2019, extending the power firm's debt maturity in an "efficient manner".

The State-owned utility has €300m of 2017 bonds outstanding, which were issued with a 6.25pc coupon, or interest rate.

It has another €500m of bonds that mature in 2019, and which have a 4.375pc coupon.

ESB Finance has engaged BNP Paribas to run a tender offer that commenced yesterday.

It intends to redeem a total of €300m in bonds from the outstanding 2017 and 2019 issues.

The utility's finance arm will buy back the 2017 notes at a 0pc purchase yield, while the 2019 notes will be redeemed at a purchase yield of minus 0.05pc.

The tender programme is due to expire on June 7.

BNP Paribas and Banco Bilbao Vizcaya Argentaria are acting as joint dealer managers on the bond redemption. Lucid Issuer Services is acting as tender agent.

Irish Independent

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