(Finance) – Terna successfully launched the first green non-convertible hybrid perpetual subordinated bond issueintended for institutional investors, for a nominal amount of one billion euros.
The issue gained great market favor with a maximum request of more than 4 billion euros, over 4 times the offer. Characterized by high quality and a broad geographic diversification of investors, Terna’s hybrid bond issue, authorized by the board of directors on 18 January 2022, received a “BBB-” by Standard and Poor’s, “Ba1” by Moody’s and “BBB” by Scope. Taking into account the subordination of hybrid bonds and the possibility of deferring the payment of interest, the “equity content” for rating agencies is equal to 50%.
The bond will have a perpetual, non-callable maturity for six years, and a price equal to 99.586%with one spread of 212.1 basis points compared to the Midswap. The issue will pay an annual coupon of 2.375% until the first reset date scheduled for February 9, 2028 and will have an effective rate of 2.45%. Starting from that date, if the early repayment has not occurred, the hybrid bond will pay annual interest equal to the reference five-year Euro Mid Swap rate increased by an initial margin of 212.1 basis points, increased by an additional margin of 25 basis points starting on February 9, 2033 and a subsequent increase of a further 75 basis points starting on February 9, 2048.
For the hybrid bond a request will be made admission to listing on the Luxembourg Stock Exchange.
The issue of a hybrid bond makes Terna’s financial profile even more flexible and helps strengthen the Group’s capital structure, further diversifying the investor base. The net proceeds from the issue will be used to finance the company’s eligible green projects, identified or to be identified on the basis of Terna’s Green Bond Framework, drawn up in compliance with “Green Bond Principles 2021” published by ICMA – International Capital Market Association and the Taxonomy of the European Unionaimed at encouraging sustainable investments.
There strategy of the group driven by Stefano Donnarumma it is therefore confirmed to be oriented towards conjugation sustainability and growthto favor the energy transition in progress and generate ever greater benefits for the country and for all its stakeholders. In this regard, Terna has prepared and published a Green Bond Framework in order to facilitate the transparency and quality of the green bonds issued. This Framework and the so-called “second party opinion”, prepared by the independent advisor Vigeo Eiris, are available to the public on the company’s website.
Terna’s hybrid green bond issue was placed by a syndicate of banks made up of BNP Paribas, Banca Akros, BofA Securities, Citi, Credit Suisse, IMI-Intesa Sanpaolo, Mediobanca, Santander, Société Générale, SMBC Nikko, UniCredit.