EnBW has launched two subordinated bonds on the capital markets with an issue size of €500m each, with one of the issues in the form of a green bond.
The proceeds from the green subordinated bond are to be used exclusively to fund climate-friendly projects, including wind and solar projects.
Rating agencies Moody’s and Standard & Poor’s classify 50% of each of the two subordinated bonds as equity, which has a positive impact on the key performance indicators relevant to EnBW’s ratings.
Chief financial officer Thomas Kusterer said: “The proceeds from today’s green subordinated bond issue will be invested in sustainable environmental and climate protection projects in the categories offshore wind, onshore wind, photovoltaics and e-mobility infrastructure.
“The proceeds from the other bond issue will likewise be directed to further implementation of the Company’s sustainability-oriented strategy but are not earmarked for specific projects.”
EnBW aims to become climate-neutral overall by 2035.
The clearly defined roadmap for achieving this comprises a phased, permanent exit from coal-fired power generation coupled with a further massive expansion of renewable energy sources.
Half of the generation portfolio is to consist of renewables by as early as 2025.
Kusterer added: “Around 80% of the proceeds from the green subordinated bond will go into future-oriented projects that we currently have under development, such as the joint offshore wind power project with BP in the UK, or under construction, such as the Gottesgabe and Alttrebbin large-scale photovoltaic projects with 150MW each in Brandenburg.”
The remaining approximately 20% will be used to refinance existing green projects.
Sustainability rating agency ISS ESG has confirmed that today’s EnBW green subordinated bond issue complies with the Green Bond Principles and has good sustainability quality.
EnBW, as the issuer, has also once again been attested good sustainability performance.
At the beginning of August, EnBW published an updated version of its Green Financing Framework, in which it lays down how the proceeds of green financing instruments are to be used.
The green subordinated bond is also certified by the Climate Bonds Initiative (CBI), whose high standards feature detailed sector-specific criteria for qualification as green bonds.
All EnBW projects financed with proceeds from the bond issue conform with the EU taxonomy for environmentally sustainable economic activities and consequently already would comply in principle with a future EU Green Bond Standard.
They also support the United Nations Sustainable Development Goals (SDGs).
EnBW was supported in issuing the bonds by a banking syndicate comprising Barclays and Deutsche Bank as joint structuring advisors and BBVA, BNP Paribas, LBBW, MUFG und NatWest as additional joint lead managers.
The green subordinated bond has a term of 60 years.
For the bond issue with an initial coupon of 1.375%, EnBW has a right of early redemption that it can first exercise on 31 May 2028 and thereafter at any coupon date.
The other subordinated bond with an initial coupon of 2.125% can first be redeemed on 31 May 2032. That bond has a term of 60 years.
The bonds are subordinate to all other financial liabilities and rank equally with EnBW’s outstanding subordinated bonds.