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Renewable Energy Finance: Major European utilities ENGIE, E.ON kick off 2023 with €3.75bn of green bond issuances

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Mohit Kaul's picture
Founder Enerdatics

Building Enerdatics. Leadership experience in a high growth SaaS company and secured a successful exit. A natural leader who cares about creating value for all stakeholders. Extensive experience...

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ENGIE has closed a €2.75bn, triple-tranche green bond issue with an average coupon rate of 3.93% and an average maturity of 12.4 years. The bonds were over-subscribed to 2.4X the issue amount and priced in line with the secondary market levels, with no new issue premium. The proceeds from the bonds will be used to satisfy ENGIE’s financing requirements for 2023 and strengthen the group’s available liquidity. With the latest issuance, ENGIE has issued €17.65bn of green bonds since 2014. 

Separately, E.ON issued a dual-tranche bond for €1.8bn, comprising a €1bn green bond maturing in Jan’35 with a coupon of 3.875% and an €800mn bond maturing in Jan’28 with a coupon of 3.5%. The issuance garnered subscriptions totaling more than €5.9bn. The proceeds of the shorter-dated bond will be used to fund general corporate purposes. In contrast, funds raised from the long-dated green bond will be deployed toward the financing and/or refinancing of eligible green projects. The move complements the €1bn+ of financing initiatives undertaken by E.ON in 2022 and, cumulatively, helps the company secure the majority of its 2023 funding needs. Commerzbank, JP Morgan, Morgan Stanley, and MUFG Securities served as active book-runners in the transaction.

Despite prevailing macroeconomic headwinds such as the war in Ukraine, which have led to volatile energy prices and energy security concerns, as well supply chain constraints related to equipment supply for renewables projects, the European green bond market continues to be an attractive investment avenue. As per Enerdatics’ research, the aggregate value of green bond issuances by energy companies in Europe grew by a whopping 54% y/y in 2022 to ~$33bn, driven primarily by $1bn+ issues from major European utilities RWE, Iberdrola, Enel and TenneTE. The market share of green bonds issued in Europe, compared to the global total, also increased from 52% in 2021 to 82% in 2022. Enerdatics attributes this increase to the massive development pipelines of major European independent power producers (IPPs), specifically the gigawatts of offshore wind projects that are anticipated to come online prior to 2030. Going forward, Enerdatics expects Europe to continue its dominance of the global green bond market over the short and medium term, as innovative financing structures in North America enable companies to secure non-recourse project-debt and raise capital through private equity/tax-equity investments, thus diluting the need for corporate green bonds.

The above analysis is proprietary to Enerdatics’ energy analytics team, based on the current understanding of the available data. The information is subject to change and should not be taken to constitute professional advice or a recommendation.

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