Spanish energy major Iberdrola has returned to the capital markets with a €1 billion (US$1.07 billion) green hybrid bond, aimed at refinancing an existing issue maturing early next year. The company reported the transaction to Spain’s National Securities Market Commission (CNMV).
The perpetual bond, which includes a repurchase option from August 2031, carries a 3.75% coupon — the lowest rate among hybrid bonds issued this year, and the most competitive since March 2022.
In line with its May senior bond, the new issue complies with both the ICMA Green Bond Principles and the European Union Green Bond Standard, marking the first hybrid bond to do so.
Investor appetite proved strong, with demand surpassing €8 billion (US$8.6 billion) — an eightfold oversubscription — allowing Iberdrola to tighten pricing and expand issuance. Over 400 qualified investors, primarily from Europe and the UK, participated, with 87% classified as sustainable or aligned with the UN Principles for Responsible Investment.
The transaction was managed by nine international banks, including Barclays, Deutsche Bank, Mizuho, CACIB, MUFG, ING, Intesa, Wells Fargo and Caixabank. The majority of allocations were made to the UK (31%), France (19%) and Germany (16%), with investment funds comprising 86% of investors.
Iberdrola said it capitalised on a favourable market window following its latest results, keeping borrowing costs near annual lows ahead of expected monetary policy moves in the US and Europe.
The deal will refinance a similar hybrid bond due for repurchase, maintaining the company’s hybrid capital base at €8.25 billion (US$8.9 billion), consistent with commitments made at its Capital Markets Day in London.
Hybrid instruments count as 50% equity under major rating agency criteria, helping Iberdrola preserve its credit profile. The company’s last hybrid issue in November 2024 carried a 4.247% coupon.
The latest transaction marks Iberdrola’s fourth capital markets operation in 2025, bringing total fundraising to €7.15 billion (US$7.7 billion), including a €5 billion (US$5.4 billion) capital increase completed in July.
