Iberdrola has successfully placed an €800 million hybrid green bond into the Euromarket, with investor demand at €3 billion—3.75 times the issue size. This is a resounding success for the Spanish utility company and a demonstration of its strong market position in investors’ eyes, considering global financial conditions are not easy.
Iberdrola’s most attractive hybrid issuance in the last three years, the hybrid green bond carries a competitive coupon rate of 4.25%. The perpetual bond comes with a par call option in August 2030 and will be utilized for refinance of renewable energy assets, which are linked to a previous €800 million hybrid bond issued in 2019.
Investor Confidence Amid Market Uncertainty
Despite the continued geopolitical turbulence and sensitive market conditions, Iberdrola was able to close the bond issue at nearly zero premium. Over 200 international investors bid for the bond, an indication of investors’ confidence in Iberdrola’s financial soundness and its strategy towards long-term growth. The bonds, which were primarily purchased by European and UK investors, demonstrate the company’s strong market reputation and ability to maintain favorable conditions even in the face of global economic volatility.
The fact that Iberdrola managed to raise such a large amount of money in a rather competitive bond market is really a testament to the trust investors hold regarding its sustainability and growth prospects. The funds received from the issuance will be used for refinancing renewable assets previously held against its 2019 hybrid bond, which maintains the hybrid stack at a steady €8.25 billion.
Strategic Refinancing and Credit Ratings
The hybrid green bond also fits with Iberdrola’s ongoing initiative to optimize its capital structure without losing its credit ratings. Hybrid bonds, classified by major rating agencies as 50% capital, improve the company’s balance sheet and support its sustainability initiatives. This ability to refinance renewable assets through the new bond issuance allows Iberdrola to maintain its hybrid debt level. As such, it would be able to continue funding its growth in the renewable energy sector with a strong financial foundation.
In this regard, it is consistent with Iberdrola’s long-term vision of building a better energy portfolio, supporting its environmental goals, and allowing it to progress as a leader in the energy transition. Through the hybrid green bond structure, Iberdrola has been able to obtain very favorable financing conditions that will support it in its commitment towards sustainable development and ESG objectives.
YEAR OF SUCCESSFUL MARKET OPERATIONS
With this €800 million hybrid green bond, Iberdrola successfully closes the eighth transaction in 2024. The company, under its capital markets strategy, has secured €6.6 billion so far this year in a multitude of diversified markets and currencies. The following are some prominent transactions carried out by the company during 2024:
- January: Issuance of the hybrid bond for a total of €700 million
- June: Acquisition of CHF 335 million in Switzerland
- July: €750 million issuance of senior bonds.
- September: €2.15 billion senior debt issuance, Iberdrola’s largest-ever.
- October: €500 million green bond issuance in Sterling.
- November: AUD 750 million in green debt issued.
Such versatility in operating with different currencies, such as the Swiss franc, British pound, Australian dollars, and Norwegian kroner, differentiates Iberdrola as a major European utility company involved in the international bond market. This diversified portfolio of successful issuances not only strengthens Iberdrola’s capital position but also reinforces its commitment to financing the energy transition.
International Participation and Strategic Partnerships
The success of Iberdrola’s new bond issue was supported by nine top-tier global banks, including BNP Paribas, HSBC, JP Morgan, and Santander. These financial institutions played a crucial role in the placement and ensured that the bond reached as wide a base of international investors as possible. The support of these banks helped Iberdrola to negotiate a competitive and quite uncertain market, securing the best possible terms for the bond issue.
Iberdrola at the Forefront of Sustainable Finance
This latest hybrid green bond will reinforce its position as a global leader in sustainable finance. The corporation’s focus on renewable energies and the struggle for a decrease in carbon footprint upon overall financing leads to every bond issuance. Finally, the success of the €800 million hybrid green bond further reinforces Iberdrola as a trusted partner for investors who wish to adjust their portfolio in line with the universal energy transformation.
Strong financial performance of Iberdrola puts it in a better perspective and highlights its success in the capital markets. Its strategic investments in renewable energy and sustainable infrastructure are driven to perfection by the company’s zest to secure their growth and sustainability targets in the years that follow after this report.