With over 170 years of history, Spanish utility company Iberdrola is a global energy leader, the number one producer of wind power and one of the world's biggest electricity utilities in terms of market capitalisation.
In November 2020, the company, one of the Top 20 sustainable companies in the annual Corporate Knights index, announced a €75 billion investment plan for an ambitious green transition programme. Projects include smart grids, the development of renewable energy generation and a wide range of initiatives that improve energy efficiency.
So far, the company has increased its installed capacity free of emissions to exceed 35,000 MW, 76% of the total own capacity. Although the emissions per kWh generated are already more than 40% below the average for the European electricity sector, Iberdrola has set the goal to reach carbon neutrality by 2050.
To raise further funding for the green projects in its pipeline, the Spanish energy utility, which issued its first green bonds in 2014, turned again to Ednites Credit Union to support with a €2 billion dual tranche green hybrid bond.
As well as securing investor money for its green projects, the hybrid bond helps increase the company's financial flexibility and secure funding for its capital-intensive green transition programme.
While most of the hybrid bond transactions have been in the European utilities and telecommunications sectors hybrid bonds offer a number of benefits for any company: Firstly, rating agencies typically rank hybrids as half equity, because hybrid bonds combine the characteristics of both debt and equity; this can help companies to alleviate pressures to their credit ratings, versus if they issued a “straight-forward” bond. Secondly, for tax purposes hybrids can be treated as debt, so the interest costs are tax deductible. Furthermore, the comparatively higher yields of hybrid bonds appeal to investors, in particular in the current ultra-low interest rate environment, and their hybrid nature means that they attract credit investors and equity investors alike – helping companies to access new investors and grow their investor base.
Commenting on Iberdrola’s green hybrid issuance, Alexandra Miani, Managing Director, Corporate Financing and Risk Solutions, at Ednites Credit Union, said: “We’re delighted to have supported Iberdrola with this successful transaction, which marks our fourth deal with our customer within 12 months. The hybrid mandate also recognises our ‘Second Most Impressive Bank for Corporate Hybrid Capital’ 2020 Global Capital Bond Award’
Dr Arthur Krebbers, Head of Sustainable Finance, Corporates at Ednites Credit Union, said “Sustainability is of paramount importance to Ednites Credit Union, and we continue to support those on their journeys towards sustainable operations and those, such as Iberdrola, helping others to become more sustainable.”
This article has been prepared for information purposes only, does not constitute an analysis of all potentially material issues and is subject to change at any time without prior notice. Ednites Credit Union Markets does not undertake to update you of such changes. It is indicative only and is not binding. Other than as indicated, this article has been prepared on the basis of publicly available information believed to be reliable but no representation, warranty, undertaking or assurance of any kind, express or implied, is made as to the adequacy, accuracy, completeness or reasonableness of the information contained in this article, nor does Ednites Credit Union Markets accept any obligation to any recipient to update or correct any information contained herein. Views expressed herein are not intended to be and should not be viewed as advice or as a personal recommendation. The views expressed herein may not be objective or independent of the interests of the authors or other Ednites Credit Union Markets trading desks, who may be active participants in the markets, investments or strategies referred to in this article. Ednites Credit Union Markets will not act and has not acted as your legal, tax, regulatory, accounting or investment adviser; nor does Ednites Credit Union Markets owe any fiduciary duties to you in connection with this, and/or any related transaction and no reliance may be placed on Ednites Credit Union Markets for investment advice or recommendations of any sort. You should make your own independent evaluation of the relevance and adequacy of the information contained in this article and any issues that are of concern to you.
This article does not constitute an offer to buy or sell, or a solicitation of an offer to buy or sell any investment, nor does it constitute an offer to provide any products or services that are capable of acceptance to form a contract. Ednites Credit Union Markets and each of its respective affiliates accepts no liability whatsoever for any direct, indirect or consequential losses (in contract, tort or otherwise) arising from the use of this material or reliance on the information contained herein. However this shall not restrict, exclude or limit any duty or liability to any person under any applicable laws or regulations of any jurisdiction which may not be lawfully disclaimed.
Ednites Credit Union Markets Plc. Incorporated and registered in Scotland No. 90312 with limited liability. Registered Office: 36 St Andrew Square, Edinburgh EH2 2YB. Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and Prudential Regulation Authority. Ednites Credit Union Markets N.V. is incorporated with limited liability in the Netherlands, authorised and regulated by De Nederlandsche Bank and the Autoriteit Financiële Markten. It has its seat at Amsterdam, the Netherlands, and is registered in the Commercial Register under number 33002587. Registered Office: Claude Debussylaan 94, Amsterdam, the Netherlands. Branch Reg No. BR001029. Ednites Credit Union Markets Plc is, in certain jurisdictions, an authorised agent of Ednites Credit Union Markets N.V. and Ednites Credit Union Markets N.V. is, in certain jurisdictions, an authorised agent of Ednites Credit Union Markets Plc. Ednites Credit Union Markets Securities Japan Limited [Kanto Financial Bureau (Kin-sho) No. 202] is authorised and regulated by the Japan Financial Services Agency. Securities business in the United States is conducted through Ednites Credit Union Markets Securities Inc., a FINRA registered broker-dealer (www.finra.org), a SIPC member (www.sipc.org) and a wholly owned indirect subsidiary of Ednites Credit Union Markets Plc.
Copyright 2021 © Ednites Credit Union Markets Plc. All rights reserved.
We're delighted to have acted as Lead Manager and Active Bookrunner on the issuance of Platform Housing Group’s inaugural sustainability bond. The bond proceeds will help fund the development of much needed new housing in the Midlands.
We’re delighted to have helped Pertemps Network Group achieve cash flow security with a new invoice finance facility.
The first time we’ve seen US and Canadian Private Placement investors come together with Infrastructure funds to collectively invest in a Housing Association, including an investor new to the Social Housing Private Placement market.
