Iberdrola reopens the hybrid bond market with a 700 million euro issue
Iberdrola reopens the hybrid bond market in Europe with a EUR 700 million bond issue, as reported to the Spanish Securities and Exchange Commission (CNMV).
The bond issue is perpetual, but has an option to repurchase in 7 years. The coupon has been set at 4.871%. It is the most competitive hybrid operation of the last 12 months.
The demand registered reflected the strong interest of fixed income investors in Iberdrola, reaching EUR 3.4 billion, more than 4.8 times the offer. This was possible thanks to the participation of more than 200 qualified international investors, mainly from Europe and the United Kingdom.
The volume of demand and the conditions set once again demonstrate the great confidence of the market and investors in the soundness and solvency of the Group's business and growth plans. This operation will be used to refinance the €700 million issued in 2018, the repurchase of which will take place shortly, thus keeping the company's hybrid volume stable at €8.25 billion. The funds raised will therefore be used to refinance the same renewable assets that were financed with the operation carried out in 2018. There has not been a hybrid bond issue on the Euromarket for two months.
The company has taken advantage of the improvement in both interest rates and credit spreads since the end of last year, which has allowed it to obtain better financial conditions than those existing in the second half of 2023, when the market environment was much more volatile. Iberdrola's flexibility to refinance this operation, as well as an appropriate reading of the market, contributed to this.
Hybrid bonds count as 50% equity, in accordance with the methodology of the main rating agencies, which means that this operation contributes to maintaining the group's credit ratings. The last issue of this type of debt by Iberdrola was in January 2023.
Eight leading international banks participated in the placement: JP Morgan, Barclays, Crédit Agricole, BBVA, Natwest, Deutsche Bank, Caixabank and Royal Bank of Canada, which facilitated access to investors.
International confidence
Investor confidence in Iberdrola is constant. In fact, at the end of December, the company signed its largest credit line in its history for 5,300 million euros with 33 international banks. The cost of this operation was at the most competitive levels for Iberdrola, with prices similar to those of 2019, and the operation was oversubscribed by more than 40%, demonstrating the strong commitment of the banks to Europe's leading utility by capitalisation and the second largest in the world.
It also extended its partnership with the World Bank with a 300 million green loan for renewable projects in countries dependent on fossil fuels such as coal, including Morocco, Poland and Vietnam.
Global leader in sustainable and green finance
Iberdrola has established itself as a global benchmark in sustainable financing, being the first private group in the world to issue green bonds, after becoming in 2014 the first Spanish company to issue a bond of these characteristics. The group currently has more than 20,000 million euros of green bonds outstanding.
In the banking market, in 2016, the company also underwrote the first green loan for an energy company, in the amount of 500 million euros. That transaction was followed by various loans and credit lines linked to sustainability criteria.
This financial strategy complements and strengthens the historic investment plan launched by the company in November 2022, in which it announced the investment of 47 billion euros between 2023 and 2025. The plan aims to boost the decarbonisation of the economy and leave fossil fuels behind, with a strong boost to electricity grids and renewables. Iberdrola will update this roadmap on 21 March at a new edition of its Capital Markets Day.
