The bond markets believe CRH is a better bet than the State. The company raised €750m on the bond market yesterday, but paid 25pc less than the State pays to borrow in the markets.
The building materials producer is paying an interest rate of 3.125pc to borrow the money over 10 years after a successful bond auction. That compares with the 4.15pc the State paid for a similar deal a week ago.
Investors placed orders for E4bn of CRH bonds, but the company opted to borrow ‘just’ E750m.
In January last year, investors had demanded a yield, or interest rate, of 5pc when CRH issued E500m of bonds that are due to be repaid after seven years.
Borrowing costs tumbled as CRH became the latest Irish borrower swamped by demand for its debt. It is also the first company from the eurozone periphery to tap the bond market since the rejection of a bailout deal by Cyprus threatened to reignite the wider euro area crisis.
The CRH bond auction was arranged by BNP Paribas, Danske Bank, Lloyds Group and Santander. Unlike the Government, CRH is regarded as “investment grade” or lower risk for investors by all three of the main rating agencies. The Irish Independent