Global energy and electricity provider Iberdrola announced that it has raised €1 billion (USD$1.16 billion) in the first-ever offering of a hybrid green bond to be issued under the new European Green Bond (EuGB) standard.
The offering drew strong demand with an order book exceeding €8 billion from more than 400 investors across Europe and the UK, Asia and North America. According to Iberdrola, the strong demand for the bond enabled the company to issue more than initially considered, and substantially reduced the cost, with a coupon of 3.75% – the lowest of all hybrid bonds issued so far this year.
The EuGB regulation was launched by the European Commission to establish a “gold standard” for green bonds, in order to combat greenwashing and advance the sustainable finance market in the EU. The regulation went into effect in December 2024. Under the regulation, all proceeds from instruments issued under the EuGB designation are required to be invested in economic activities that are aligned with the EU Taxonomy, although the rules include a flexibility pocket enabling 15% to be invested in economic activities that comply with the taxonomy requirements, but in sectors that don’t yet have established taxonomy criteria, with issuers clearly explaining where these funds will be allocated.
Companies issuing bonds under the EuGB designation are also required to follow strict transparency criteria, including disclosing how the proceeds from the bonds will be used, as well as committing to a green transition plan, and reporting on how the investments contribute to those plans.
Iberdrola is one of the largest corporate issuers of green bonds, using the instruments to fund projects including renewable energy, energy efficiency, clean transportation and waste management. The company announced plans in 2021 for its financing structure to have an increasingly higher percentage of green and sustainable products, estimated to account for nearly two-thirds of its debt by 2025. In 2024, 94% of the financing signed by the company was sustainable, with the group’s sustainable financing as of the end of 2024 exceeding €60 billion.
In a statement announcing the results of the offering, Iberdrola said:
“The volume of demand and the conditions set once again demonstrate the level of confidence of the market and investors in the soundness and solvency of the Group’s business and growth plans.”
