Iberdrola has announced the launch of a €400 million green bond issue, with its profitability linked to the evolution of the company’s share price. The bond has a maturity date set for 2030 and a coupon rate of 1.5%.
This type of bond is unique in that its returns are indexed to the performance of Iberdrola’s stock. Investors have the option to exercise a call option on the company’s share price within three months prior to the bond’s maturity. However, the call option will only be exercised through the payment of the price difference, meaning Iberdrola will not issue or deliver any shares, ensuring there is no dilution of its existing shareholders.
The green bond transaction was carried out in partnership with international banks, including JP Morgan, Natixis, Mizuho, and Morgan Stanley. Alongside the bond issuance, Iberdrola is set to acquire a hedging option identical to the one sold within the bond, enabling it to hedge against any risk of exercise by bondholders in the event of a significant revaluation of its share price.
Iberdrola has not specified the exact level at which this hedging option will be triggered, but it will determine the threshold in the coming days.
This green bond issuance is not Iberdrola’s first of its kind. In 2022, the company issued €450 million in green bonds also linked to its share price.
By linking its bonds to the company’s share price, Iberdrola is exploring innovative ways to attract investment while maintaining its focus on sustainability and green energy projects.
