Eesti Energia raised 400 million euros of green hybrid bonds, listed on the London Stock Exchange to support its business and strengthen its financial position. The funds raised will be invested in ongoing and planned projects supporting the development of green energy.
Investors oversubscribed the offer fourfold at more than 1.6 billion euros. Eesti Energia's green hybrid bond offer attracted nearly 200 investors from around the world, with two-thirds of the subscribers coming from Europe, including Estonia.
"The strong interest of international investors shows that Eesti Energia Group and our strategy towards a greener future is credible and ambitious. The fourfold oversubscription of green hybrid bonds confirm that the company's plans are sustainable and promising," said Marlen Tamm, Member of the Management Board and CFO of Eesti Energia Group.
According to Tamm, the interest of investors in the bond depends largely on three factors, which are the credit rating of the company offering the bond, market conditions, and the nature of the instrument being issued. "The exceptionally high demand allowed us to offer bonds at a lower interest rate than we originally planned," Tamm added. "We were able to tighten pricing by more than 50bps from during the bookbuild process – we closed the offer at a coupon rate of 7.875%, which is comparable to other similar bond offers both internationally and in Estonia. We are very happy with the result and strong statement of confidence from the international investor community."
It is the first green hybrid bond issued in the Baltics to be offered internationally and listed on the London Stock Exchange. A green hybrid bond means that the company takes responsibility to investors to invest the capital raised by the bond only in green projects. The hybrid will also benefit from 50% equity content from Moody’s and S&P, whilst being fully equity accounted under IFRS.
In order to classify the bond as green, Eesti Energia has prepared a Green Finance Framework, which has been validated by ISS Corporate Solutions, an independent consultancy, who issued a Second Party Opinion on compliance with the green criteria. The success of the green hybrid bond is confirmation that Eesti Energia is moving in the right direction on its green journey.
Eesti Energia would like to thank all the parties who helped to prepare and issue the green hybrid bond: Goldman Sachs Bank Europe SE, LHV Pank, A&O Shearman, Linklaters, Sorainen and Ellex Raidla.
Eesti Energia is an international energy group whose home markets are the Baltic States, Finland and Poland. The group is engaged in both energy production and sales, the development of the chemical industry, and the provision of useful and convenient energy solutions to customers.
