Iberdrola Successfully Reopens European Hybrid Bond Market with €700 Million Issuance

Iberdrola, a prominent player in the energy sector, has made a noteworthy return to the European hybrid bond market by issuing a €700 million perpetual bond, as confirmed to the National Securities Market Commission (CNMV). The bond, which comes with a repurchase option within 7 years, boasts a fixed coupon rate of 4.871%, marking it as the most competitive hybrid operation in the past 12 months.

The issuance garnered substantial interest from fixed-income investors, reaching a demand of €3.4 billion, oversubscribed by 4.8 times. More than 200 international investors, predominantly from Europe and the United Kingdom, participated in the offering. Notably, this marks the first hybrid bond issue on the Euromarket in two months.

The robust demand and favorable coupon rate underscore investors’ confidence in Iberdrola’s fiscal strength, business outlook, and growth plans. The funds raised from this operation will be utilized to refinance the €700 million issued in 2018, maintaining the company’s hybrid volume at €8.25 billion. The assets to be refinanced align with those included in the 2018 operation.

Iberdrola’s ability to capitalize on improved interest rates and credit margins since the end of the previous year, coupled with its flexibility in assessing market conditions, contributed to the success of the placement. Hybrid bonds, considered as 50% capital by major rating agencies, aid in sustaining the group’s credit ratings. This issuance follows Iberdrola’s last venture into this type of debt in January 2023.

The placement involved the participation of eight leading international banks, including JP Morgan, Barclays, Crédit Agricole, BBVA, Natwest, Deutsche Bank, Caixabank, and Royal Bank of Canada, facilitating access to a broad investor base.

Iberdrola’s solid standing in the eyes of investors was further evidenced by its record-breaking €5.3 billion credit line signed in December with 33 international banks, showcasing the banking sector’s robust confidence in the company as Europe’s leading electricity provider.

Moreover, the company expanded its collaboration with the World Bank, securing a €300 million green loan for renewable projects in nations heavily reliant on fossil fuels, such as Morocco, Poland, and Vietnam.

Recognized as a global leader in sustainable finance, Iberdrola has been at the forefront of green bonds issuance since 2014 and currently holds almost €20 billion in outstanding green bonds. This financial strategy aligns with the company’s ambitious €47 billion investment plan announced in November 2022, spanning the period 2023 to 2025, with a focus on advancing decarbonization, smarter electricity grids, and renewable energy. Iberdrola is set to provide updates on this plan in March 2024 during its next Capital Markets Day.