Sustainable Finance

Iberdrola Reopens Market in Europe Amidst Crisis in Ukraine

Published on: 14 March 2022 07:20 PM
by KnowESG
(Credit: Bernard Blanc)

A Brief Summary

Iberdrola reopens the fixed income Euromarket with a €1 billion green bond issue in the middle of the crisis in Ukraine. The demand soars in the market exceeding 3 billion euros with over 185 international investors coming forward, helping the closure of the green bond that has a ten-year maturity.

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The firm is the first Spanish issuer to enter the Euromarket amid the present crisis in Ukraine and one of the first issuers along with Berkshire Hathaway in the US, Denmark's Vestas and Germany's BASF.

The issuance will allow the firm to bolster its liquidity position and reduce the market risk due to the evolution of interest rates and credit spreads.

The coupon was set at 1.375% after achieving a spread of 60 basis points over the mid-swap benchmark for the corresponding maturity.

The good conditions earned by the firm during the current crisis displays the solidity and robustness of its solvency, as well as its leadership in green financing strategy. The issue has been placed among 181 investors, particularly from the UK and Europe.

As socially responsible investors are added to the interest of conventional investors, green bonds tend to produce more demand and lower costs. Iberdrola continues to broaden its investor base and grow demand, which facilitates the execution of these transactions in challenging market circumstances. According to BBVA, the transaction's Green Advisor, a large portion of the transaction (69 per cent) has been placed among this group of investors.

The proceeds will be used to finance the firm's investments in renewable offshore wind installations in France and Germany.

Bank of America (Coordinator), Citibank, BNP, HSBC, BBVA, Santander, Sumitomo, Intesa San Paolo and ING are nine leading international banks that participated in the placement.

One of the main features of green bonds is that the funds raised are used to finance sustainable, socially responsible projects with a positive implication on the environment.