New successful financing operation by Iberdrola. The electricity utility, through the US regulated grid business New York State Electric & Gas Company (NYSEG), a subsidiary of Avangrid, has successfully placed a 10-year green bond issue in the United States for 525 million dollars (490 million euros). Demand exceeded 2 billion euros, and this enabled the spread over the benchmark interest rate to be cut to 135 basis points. This translated into a transaction cost of 5.332%.
The ability of the company chaired by Ignacio Galán to access the financing markets was reaffirmed with a transaction in the US market in the middle of August, which attracted the interest of large investors, with more than 60 US accounts participating in the transaction. This is further proof of its ability to attract investors in different markets.
Europe’s largest electricity company in terms of stock market value has this time taken advantage of the fall in long-term interest rates in the United States. Investor confidence in Iberdrola is at an all-time high and the issue also had the added attraction of being green, which attracts a growing number of investors. Iberdrola thus paid a minimal new issue premium. The funds, which will be used to boost the network business in the United States, have just been disbursed.
The banks involved in the transaction were BNP Paribas, MUFG, Wells Fargo, Santander, SMBC, Intesa and Commerzbank.
This operation joins the one carried out by Iberdrola on 1 August, together with ICO, Sabadell and HSBC, who signed a syndicated green loan for 500 million euros with Cesce’s coverage. This loan, which has a 15-year maturity, contributes to strengthening the diversification of Iberdrola’s sources of financing.
The NYSEG loan is Iberdrola’s fourth public transaction so far this year, following the 700 million euro hybrid bond (subordinated debt) issued in January, the 335 million franc placement in the Swiss market at the end of June and the 750 million euro senior bond issued in July.
International confidence
Market confidence in Iberdrola is constant. Last month, it placed a senior bond for 750 million euros with strong demand, and a few weeks earlier it diversified its financing with a green bond placement for 335 million Swiss francs.
In addition, in March it signed a 700 million euro green loan with the European Investment Bank for the expansion of electricity grids in Spain and in January Iberdrola and the World Bank extended their alliance with a 300 million euro green loan for renewable projects in emerging countries.
That same month, it issued 700 million euros in hybrid bonds, thus keeping the company’s hybrid volume stable at 8.25 billion euros. The funds obtained were used to refinance the renewable assets that had been financed with the hybrid bond issued in 2018, which was replaced with this operation.
At the end of December 2023, the company signed its largest credit line in history for 5.3 billion euros with 33 international banks. The cost of this operation was at the most competitive levels for Iberdrola, with prices similar to those of 2019, and the operation was oversubscribed by more than 40%, demonstrating the strong commitment of the banks to Europe’s leading utility by capitalisation.
Global leader in sustainable and green finance
Iberdrola has established itself as a global benchmark in sustainable financing, being the first private group in the world to issue green bonds, after becoming the first Spanish company to issue a bond of these characteristics in 2014. The group currently has around 23,000 million euros of green bonds outstanding.
In the banking market, in 2016, the company also underwrote the first green loan for an energy company, in the amount of 500 million euros. That transaction was followed by various loans and credit lines linked to sustainability criteria.
This financial strategy complements and strengthens the historic investment plan launched by the company in March 2024, in which it announced the investment of 41 billion euros between 2024 and 2026. The plan aims to drive the electrification of the economy, with a strong boost to electricity grids and renewables.