Cantillon
Anyone with plans to cash in on the opportunities that this is likely to create can breathe a sigh of relief.
But, in an odd way, it shows the challenge facing the EU as a whole in its plans to integrate its various energy markets. Marie Donnelly, director of energy efficiency and innovation with the EU Commission, told the Irish Institute for European Affairs yesterday that we are a long way from such integration.
Given that there can be sharp policy differences between ministers in the same government, how difficult is it going to be to get multiple administrations across an entire continent to sing from the same hymn sheet?
Bord Gáis bond sale is good news for State
For all the budgetary travails in Europe, it has been another positive week for Ireland in the bond markets.
Buoyed by the strong support for the ESB’s recent bond sale, fellow State utility Bord Gáis Éireann decided to follow suit, raising €500 million in five-year money in the market to refinance existing debt.
Several features marked the BGE issue as worthy of note. First, at 3.625 per cent, the yield on the bonds is far more favourable than the 5.75 per cent Bord Gáis had to offer the last time it entered the market for debt, in 2009 when it borrowed €550 million. That is the money that the latest fundraising will pay down. The lower interest rate will also enhance the group’s balance sheet.
More striking, bond analysts Glas noted that the sale was reported to have attracted interest from 400 separate bidders and received orders of €6.5 billion. Bond sales are always oversubscribed – they are in deep trouble if not. However, a 13 times multiple on the debt available is quite extraordinary. A bond issue that found itself oversubscribed between four and six times would be seen as positive.
Bord Gáis was the fourth group to tap the markets in the past fortnight – following the NTMA, Bank of Ireland and the ESB – and adds strength to the belief that Ireland can re-enter the bond markets on schedule, as predicted recently by German finance minister Wolfgang Schäuble.
But that’s not guaranteed and episodes like the EU’s latest failure to agree – this time on a seven-year budget – could easily see confidence in the State’s potential for short-term recovery slip.
Monday sees the latest chapter in another tale of EU dithering, this time over the ability of Greece to repay its debt, a conflict between the EU, the ECB and the IMF that is holding up payment of the latest tranche of bailout funds to the beleaguered Greeks.
It may have been a good week on the bond markets for the peripherals, with Ireland at their head, but timing remains key – and much of that remains out of our control.
On that basis, it was possibly a little surprising that the NTMA did not capitalise on the favourable view of Ireland to sell more longer-term debt itself.
Next week
European finance ministers meet on Monday in another attempt to agree terms with the IMF and the ECB for the disbursement of the latest tranche of bailout funds for Greece.
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