An investment in security

Eurogrid GmbH (Eurogrid) is an energy company based in Berlin, Germany, that invests in electric utility assets and provides support services to its customers. Eurogrid is indirectly owned and managed by the Euronext-listed Belgian Elia Group, and Kreditanstalt für Wiederaufbau (KfW).

Eurogrid owns a 100% interest in 50Hertz Transmission GmbH, one of the four trans­mission system operators in Germany regulated by the German federal regulator “Bundes­netz­agentur”. 50Hertz is responsible for the operation, main­tenance, planning, and expansion of the 380/220 kilovolt transmission grid throughout the German Federal States of Thuringia, Saxony, Saxony-Anhalt, Branden­burg, Berlin, Mecklenburg-Western Pomerania, and Hamburg; totalling approximately 109,000 km² and reaching 18 million customers in its control area.

Orders peak at €8.8 billion for Eurogrid’s fifth and sixth green bonds

Having issued four green bonds since 2020, Eurogrid was looking to tap into the green bond markets again with a green dual-tranche, comprising a 3-year €650 million green bond and an 11-year €850 million green bond to fund projects which will help with the integration and transportation of additional quantities of renewable electricity – as outlined in the company’s updated Green Bond Framework from 2022.

Selecting NatWest as Joint Active Bookrunner, Eurogrid announced the green dual-tranche to the market during an overall lighter supply period in primary issuances. These favourable market conditions, in combination with Eurogrid’s recent investor update across all key European regions, paid off: investors rushed to put in orders, and books grew quickly to a total volume of over €8.6 billion, which allowed Eurogrid to tighten the price while maintaining the size. Order volume peaked at around €8.8 billion at final terms. Eurogrid’s fifth and sixth green bonds will pay an annual coupon of 3.075% and 3.732% respectively.

Looking at origin, investors from Germany, Austria, and Switzerland led demand for the 3-year bond, taking 27% of the allocation, followed by investors from France with 25% and investors from the UK and Ireland with 23%.  Meanwhile, 35% of the 11-year bond allocation went to investors in the UK and Ireland, while 29% went to Germany, Austria, and Switzerland, and 22% to France. Looking at investor type, asset managers took 77% of the 3-year tranche and 72% of the 11-year tranche, followed by insurance and pension funds taking 13% and 20% respectively.

Green dual-tranche bonds help secure high level of investment in expansion of German extra-high-voltage grid

Marco Nix, Chief Investment and Financial Officer (CFO) at 50Hertz, commented: “The successful issues once again show the confidence the financial markets have in the sustainability-oriented corporate strategy of 50Hertz and the Elia Group as the main shareholder of Eurogrid. The bonds will serve to secure the high level of investment in the expansion of the German extra-high-voltage grid in both the short and long term. In this way, we are creating the conditions for achieving the goal of climate neutrality.”

Sam Boughton, Head of Corporate Syndicate, NatWest, said: “We congratulate Eurogrid for achieving a well-diversified orderbook and attracting high calibre investors, underlining Eurogrid’s credit story in combination with its sustainability credentials. We’re proud and committed to actively contribute to building a greener economy through this and similar green issuances.”

Dan Bressler, Director, Climate and ESG Capital Markets, NatWest, said: “The success of this transaction is a clear testimony to the quality of Eurogrid’s sustainability strategy and green finance approach. Climate is of paramount importance to our business, our customers, and the economies we operate in, and we were delighted to support Eurogrid to achieve their climate goals.”

Marco Sterly, Director, Capital Markets, NatWest, said: “The strong investor support for this transaction underlines Eurogrid’s strong recognition with fixed income investors and is a testimony to their continued effort to update fixed income investors about their credit story. We are looking forward to supporting the company on its journey to facilitate the energy transition in Germany and beyond.”