Enel successfully places its first “General purpose SDG linked bond” on the European market with a multi-tranche issue of 2.5 billion euros

Published on Wednesday, 16 October 2019

“After our successful SDG-linked bond placement in the US, we have launched our first-ever sustainable bond on the European market, and the excellent outcome of this issuance is further evidence of the growing appetite of investors for innovative, sustainable financing tools. There is a clear link between sustainability and value creation, as by investing in environmentally and socially sustainable projects companies can secure high profitability and minimise risks, while contributing to the achievement of SDGs. We are confident that companies will increasingly embrace this model, orienting their businesses towards an overall strategy that places sustainability at the core of their investment and financing decisions”

– Alberto De Paoli, Enel CFO

The bond, which is guaranteed by Enel and launched as part of Enel and EFI's medium-term bond issue programme (Euro Medium Term Notes Programme - EMTN), was almost four times oversubscribed, with total orders of about 10 billion euros and the significant participation by Socially Responsible Investors (SRIs), enabling the Enel Group to continue to diversify its investor base. The issue is expected to be listed on the Irish Stock Exchange.

The strong demand for the bond issued today once again confirms the appreciation of the markets for the soundness of the Group's sustainable strategy and its consequent financial results, reflecting Enel's push towards increasingly sustainable finance. The issue is in line with the SDG linked bond launched on the American market by EFI in September 2019 for a total of 1.5 billion US dollars, as well as the three previous green bonds issued by EFI on the European market, for a total of 3.5 billion euros.

The success of the issue is also a recognition of the Group's ability to generate value by contributing to the achievement of the UN SDGs. Once again, the value of sustainability was reflected in the demand and pricing mechanics of the bond, allowing Enel to obtain a discount of around 10 bps with respect to a comparable issue without sustainability characteristics, representing a discount of around 20% across the weighted average cost of the whole transaction.

Enel is focused on creating value through business decisions that support the pursuit of the following four SDGs over the 2019-2021 plan:

  • SDG 7 “Affordable and clean energy”, with over 11.6 GW of additional renewable generation capacity;

  • SDG 9 “Industry, innovation and infrastructure”, with over 46.9 million smart meters installed and 5.4 billion euros of investment in innovation and digitalisation;

  • SDG 11 “Sustainable cities and communities”, with retail investment and new electrification-oriented energy services to achieve, among others, 9.9 GW of demand response capacity and 455,000 charging points for electric mobility;

  • SDG 13 “Climate action”, with a commitment to reduce carbon dioxide emissions to below 125 g/kWh by 2030 and full decarbonisation by 2050.

 

In particular, this bond issue, which will be used to meet the Group’s ordinary financial requirements, is linked to Enel’s ability to achieve the following Sustainable Development Goals:

  1. SDG 7 “Affordable and clean energy”, through the achievement, by December 31st, 2021, of a percentage of installed renewable generation capacity (on a consolidated basis) equal to or greater than 55% of total consolidated installed capacity. As of June 30th, 2019, the figure was already equal to 45.9%;
  2. SDG 13 "Climate action", through the achievement of a level of greenhouse gas emissions by 2030 equal to or less than 125 g of CO2 per kWh (in 2018 this figure was already equal to 369 g of CO2 per kWh), in line with the commitment to reduce Enel’s direct greenhouse gas emissions per kWh by 70% by 2030 compared to the 2017 values, as certified by the Science Based Targets initiative (SBTi) and consistent with the Paris Agreement on climate change.

More specifically, the issue is structured in the following tranches:

  • 1,000 million euros at a fixed rate of 0.00%, maturing June 17th, 2024 and linked to SDG 7 “Affordable and clean energy”:

  • the issue price was set at 99.123% and the effective yield at maturity is equal to 0.189%;

  • the interest rate will remain unchanged to maturity subject to achievement of the sustainability target indicated under point i. above as of December 31st, 2021;

  • if that target is not achieved, a step-up mechanism will be applied, increasing the rate by 25 bps as of the first interest period subsequent to the publication of the auditor’s  assurance report.

  • 1,000 million euros at a fixed rate of 0.375%, maturing June 17th, 2027 and linked to SDG 7 “Affordable and clean energy”:

  • the issue price was set at 99.257% and the effective yield at maturity is equal to 0.474%;

  • the interest rate will remain unchanged to maturity subject to achievement of the sustainability target indicated under point i. above as of December 31st, 2021; 

  • if that target is not achieved, a step-up mechanism will be applied, increasing the rate by 25 bps as of the first interest period subsequent to the publication of the auditor’s  assurance report.

  • 500 million euros at a fixed rate of 1.125%, maturing October 17th, 2034 and linked to SDG 13 “Climate action”:

  • the issue price was set at 98.922% and the effective yield at maturity is equal to 1.204%;

  • the interest rate will remain unchanged to maturity subject to achievement of the sustainability target indicated under point ii. above as of December 31st, 2030;

  • if that target is not achieved, a step-up mechanism will be applied, increasing the rate by 25 bps as of the first interest period subsequent to the publication of the report issued by a third-party expert charged with validating the methodology for measuring CO2 emissions applied by the Group.

 

Additional information on the guiding principles of the bond issue and the Group’s sustainability strategy is available on the Enel website, at www.enel.com/investors/fixed-income/main-programs/sdg-bond.

The operation was supported by a syndicate of banks, with Banca IMI, Barclays, BBVA, BNP Paribas, BofA Merrill Lynch, CaixaBank, Credit Agricole CIB, Credit Suisse, Deutsche Bank, Goldman Sachs International, HSBC, ING, J.P. Morgan, Mediobanca, Mizuho, MUFG, Natixis, Santander Corporate & Investment Banking, SMBC Nikko, Unicredit acting as joint-bookrunners.