Iberdrola, first company in the world to issue a green bond under European Union and ICMA standards
Iberdrola has become the first Spanish company to issue a bond under the new European Union green bond standard (EU GBS). It has done so in a transaction that allows it to raise 750 million euros over 10 years. The company also becomes the first in the world to issue a bond that simultaneously complies with the EU GBS and the Green Bond Principles of the International Capital Market Association (ICMA).
Demand was five times the amount placed, reaching the largest book for a senior transaction by Iberdrola since 2021, demonstrating investor confidence in the electricity company and investor appetite for this type of green instrument, which combines the best market standards for the first time.
The 750 million obtained with today's issue will be allocated to various renewable projects, some already in operation and others under construction.
This issue has attracted the attention of investors and has been in high demand, with more than 3.7 billion euros, allowing for a final credit spread of 110 basis points above the corresponding benchmark (midswap for that ten-year term), a level that has allowed for a coupon of 3.5% to be set. The total cost represents a negative issue premium on the theoretical value of the bond according to the secondary market, making it the lowest recorded in all issues since the announcement of the Trump Administration's tariffs.
More than 170 investors ultimately participated in the transaction. The placement was distributed across the United Kingdom (32%), France (28%), Germany (11%), Benelux (10%), Spain (9%) and other European countries (10%), with 93% of investors being sustainable investors.
This is Iberdrola's second public transaction, following the green bond linked to its share price launched last March, which raised 400 million euros over five years with a coupon of 1.5%.
Bank of China, BBVA, CIC, Crédit Agricole, Deutsche Bank, HSBC, MUFG and UniCredit participated in the placement.
The transaction allows the company to strengthen its already comfortable liquidity position of 20.9 billion euros at the end of March, under excellent conditions and at a good time in the market, while offering investors the opportunity to participate in a senior transaction by Iberdrola in the first half of the year.
Iberdrola is known for combining its international growth with strong financial solidity. In fact, at the end of the first quarter, Iberdrola increased its operating cash flow (FFO) by 11% to over 3.5 billion euros, allowing it to maintain its financial strength and rating after consolidating ENW.
The cash flow to net debt ratio stood at 22.3% in the first three months of the year.
Improved forecasts
Thanks to its diversified business, selective investment in renewables, significant growth in networks and strong financial position, the company expects double-digit growth in adjusted net profit in 2024, taking into account the positive impact of regulated assets and US accounting standards.
This growth is underpinned by an increase of more than 10% in regulated assets with better tariffs. In addition, the group plans to bring nearly 4,000 MW of renewable energy into operation this year, with 100% of the energy sold by 2025.