World's largest sustainabilty-linked bond in Italy with an innovative S-L Cross Currency swap
The Enel Group, a multinational energy group based in Italy and a global leader in the energy sector, placed the world’s largest ever Sustainability-Linked Bond (SLB) in all currencies, a multi-tranche 4 billion US dollar instrument in the United States and international markets, overtaking its previous record with the EUR 3.25bn SLB priced last in June.
Alongside the transaction, the company has signed new “Sustainability-Linked Cross Currency Swaps” to be hedged against the U.S. dollar-euro exchange rate and interest rate risk. The innovative feature of these derivative instruments is the commitment of the counterparties to achieve specific and ambitious SPTs (Sustainability Performance Targets), with a discount or penalty in the cost of the transaction based on the ability of each counterparty to meet its respective SPT.
Enel is at the forefront in driving the change towards a sustainable energy system, committed to steering the transition towards a more sustainable system by accelerating the production of renewable energies all over the world, setting increasingly ambitious targets and implementing its strategy of decarbonisation and electrification.
In the coming years, we will see a strong acceleration of SDG-aligned investments, which will represent a key lever in creating long-term sustainable value for everyone. We are firmly convinced that Sustainability-Linked finance will drive the enhancement of sustainable capital markets, placing SDG-linked targets and financial value at the core of its structure, progressively replacing conventional debt
The issue was three times oversubscribed, with orders of approximately 12 billion US dollars, representing the largest Sustainability-Linked transaction ever priced in the fixed-income capital markets as well as the largest sustainable finance fixed-income transaction of the year to date by a corporate issuer.
The success of the new issue is a clear acknowledgement of the Group's sustainability strategy and of its ability to generate value by contributing to the achievement of the Sustainable Development Goals set by the United Nations.
In this respect, in October 2020, Enel announced a revision of its Group’s Scope 1 Direct Greenhouse Gas Emissions Amount for 2030, with a reduction by 80% compared with the 2017 baseline. The target is certified by the Science Based Targets initiative (SBTi) as consistent with limiting global warming to 1.5ºC above pre-industrial levels.
Societe Generale acted as Joint Bookrunner in the last two S-L Bonds and as Hedging Counterparty in the S-L Cross Currency Swap.
“Societe Generale is a pioneer in the Sustainability-linked Derivatives space, and we are delighted to be a partner of choice for ENEL. Together we designed the first ever traded SDG-linked Cross Currency Swap in 2019 and we are very happy to be involved again in this landmark transaction with an innovative Sustainability-linked Cross Currency Swap.
We at Societe Generale are very proud to have assisted the Enel Group in the successful launch of these two strategic transactions in the two most important capital markets in the world. Without any doubt Enel represents a best in class case.