Enel launched and successfully closed the issue of the world's first sustainable bond worth 1,5 billion dollars (about 1,4 billion euros). The transaction was carried out by the subsidiary Enel Finance International NV, the Group's Dutch finance company.
The single-tranche issue intended for institutional investors and launched on the US market and on international markets has collected subscriptions equal to three times the offer, totaling orders for a total amount of approximately 4 billion US dollars and a significant participation of the so-called Socially Responsible Investors (SRI). An extra value, underlines Enel's note, which allows the group to continue to diversify its investor base.
I Social development goals (SDG) promoted by the UN on which Enel has committed itself with its business choices submitted to investors are numbers 7,9, 11, 13 and 11,6: ranging from accessible and clean energy (46,9 GW of additional capacity) to innovation (5,4 million digital meters installed and 9,9 billion investments), from sustainable cities and communities (investments aimed at reaching, among others, 455.000 GW of demand-response and 2 charging points for electric mobility ) to the fight against climate change with the commitment to reduce CO2050 emissions and complete decarbonisation by XNUMX.
“The success achieved on the markets by the issue – notes Enel – is a sign of recognition of this strategy. The value of sustainability has in fact been reflected in the mechanics of demand and supply pricing of the emission, allowing Enel to obtain an economic advantage of around 20 bps with respect to a potential emission of bond without sustainable characteristics”. "The issue - continues the note - the first of its kind and intended to meet the company's ordinary financial needs, is linked to the group's ability to reach, as at 31 December 2021, a percentage of installed capacity from renewable sources (out of consolidated basis) equal to or greater than 55% of the total consolidated installed capacity. To ensure and guarantee the transparency of the results, the achievement of this objective (as at 30 June 2019 already equal to 45,9%) will be the subject of a specific assurance reports issued by the appointed auditor”.
The operation was structured in a single slice of 1,5 billion US dollars at a rate of 2,650% maturing on 10 September 2024. The issue price was set at 99,879% and the effective yield at maturity is 2,676%. The expected settlement date for the issue is 10 September 2019.
The interest rate applied will remain unchanged until the maturity of the bond loan against the achievement of the declared sustainable objective but, if this is not achieved, an increase of 25 bis in the interest rate is envisaged, following the report.
At the same time as the issue, concludes the group's note, Enel structured the first “SDG Linked Cross Currency Swap” in the world. The peculiar characteristics of this derivative instrument with which the Group hedges against the dollar-euro exchange rate and interest rate risk is the commitment of the bank with which it was signed to support the development of “Positive Impact Finance” (“PIF”) and obtaining a discount in the cost of the operation due to the sustainability factor, in line with the structure of the bond.
After the success of the American issue, Enel could do an encore in Europe. This was stated by the CEO of the electrical group Francesco Starace on the sidelines of the Ambrosetti workshop in Cernobbio. “It's a very innovative bond. For the first time – he said – we have satisfied the enormous market demand for investing in sustainability. For now there were green bonds, a valid instrument, which we have used, but limited and complex to manage because it fails to satisfy the enormous appetite of investors. Here instead we make a generic commitment to expand renewable production capacity in the world, contributing to the achievement of the UN targets on sustainability. And if we don't respect our objectives, we pay a penalty to the investors”. “For this reason – he concluded – it makes sense to repeat it also in Europe, where there is demand from investors”.
(Updated 15:51pm Friday 6th September 2019)
