Vattenfall Issues £250 Million Hybrid Bond To Finance Green Energy Projects

Swedish energy conglomerate Vattenfall has announced that it has successfully issued a £250 million green fixed-rate hybrid bond with an objective of financing eligible green projects that meet the requirements of green financing framework of Vattenfall.

The company held that the bond issue was almost three times oversubscribed. This is Vattenfall’s first hybrid bond issued since June 2021 and has a maturity of 60.25 years with the first reset date after 5.25 years.

The energy development company said that the transaction attracted an order-book of above £700 million. The coupon is 6.875 per cent. Proceeds are earmarked for investments in the following four eligible categories under the Green Financing Framework dated May 2022. These four categories are Renewable energy, Transmission and distribution of electricity, Energy efficiency and Clean transportation.

“The success of our first green hybrid bond since June 2021 once again underlines the broad-based support Vattenfall receives from investors to drive the energy transition forward”, says Maria Paulinz, Head of Treasury at Vattenfall.

With this transaction, Vattenfall said that it proactively manages its hybrid capital base ensuring a stable layer of rating agency equity credit. The Green hybrid capital reinforces the company’s sustainability commitment, provides cost efficient equity-like capital whilst supporting solid investment grade rating of the firm.

Vattenfall also mentioned that NatWest Markets acted as structuring advisor and Barclays, NatWest Markets and RBC Capital Markets as joint bookrunners on the bond issue. The settlement date for the bond issue is 17 May 2023.

Previously, Vattenfall issued a £250 million green fixed-rate hybrid bond that was almost five times oversubscribed and the proceeds were employed for financing investments that contribute to its goal of enabling fossil-free living within one generation. This was in June,  2021.

As the energy business of the firm expands, it recently announced that it will build and operate Finland’s first major offshore wind farm having a capacity of 1.3 GW.