Iberdrola has announced the successful placement of a €400 million ($ 433 million) green bond issue with a five-year maturity, marking its latest foray into the structured bond market. The bond, which carries a 1.5% coupon, is indexed to the company’s share price, allowing investors a return tied to equity performance.
This innovative financial instrument enables bondholders to exercise a call option on Iberdrola shares in the three months preceding maturity. However, the settlement will always be in cash, ensuring that no new shares are issued and thereby eliminating any dilution risk for existing shareholders.
The transaction was executed with the support of four major international banks: JP Morgan, Natixis, Mizuho, and Morgan Stanley.
In a parallel move, Iberdrola will acquire a hedging option mirroring the terms of the bond, protecting the company against potential exposure if its share price surpasses a predetermined threshold. The strike level for this option will be set in the coming days.
According to the company, the structure offers cost efficiencies compared to conventional debt instruments and is seen as an opportunistic approach to capital raising.
This is not Iberdrola’s first venture into share-linked structured bonds. In 2022, the firm issued a €450 million green bond tied to its share price, following a €500 million issuance in 2015, which was later upsized by €200 million in 2020.
