Spanish electric utility Iberdrola has issued €850 million (US$932 million) in green bonds to investors, to support the development of new renewable projects around the world.
Iberdrola issued the bond last week, with 142 investors providing the company with funding in exchange for returns in the future. Iberdrola set the credit spread of the bond at 60 basis points over the next ten years, will translates to a 3.625% interest rate for the bond’s backers.
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The funds will go towards what the company calls “green eligible assets”, that is to say renewable energy and power infrastructure projects covered under its green financing framework. While Iberdrola did not announce which projects in particular would receive the additional funding, last month the company signed a number of ambitious deals for new clean power projects, including solar facilities in Spain and across Europe, so Iberdrola’s interest in expanding its renewable power capacity is clear.
Between 2019 and 2020, Iberdrola closed its remaining coal-fired power plants, and increased the capacity of its renewable power projects from 32GW to 34.9GW. Solar was a particular beneficiary, with the company’s installed capacity of solar generation increasing from 1GW to 1.9GW from one year to the next, and greater investment will be needed to continue this trend.
Iberdrola announced that eight banks agreed to back the bond, including Barclays, Citi and Crédit Agricole, as the utility continues to look into bond funding mechanisms as a means to meet its energy production targets. In January, it announced that it had issued a bond worth €1 billion, at a fixed interest rate of 4.875%, and these low-interest, long-duration agreements could form a core component of the company’s energy mix in the long term.
The company also noted that the January bond round attracted demand from investors for €7 billion of bond funding, while last week’s round saw demand exceed €2 billion, suggesting that investors, too, are eager to participate in bond funding of renewable power projects.
