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    Vattenfall Enters Hybrid Green Bond Market

    Stockholm (NordSIP) – On Wednesday, May 26th, Vattenfall issued a SEK3.5 billion green bond, in two hybrid tranches of fixed a floating rate notes. This is Vattenfall’s first hybrid capital under the Green Bond Framework, published in 2019. Proceeds from the bonds are earmarked for investments in renewable energy and related infrastructure, energy efficiency, electrification of transport and heat as well as industrial projects.

    The proceeds will finance investments that contribute to Vattenfall’s goal of enabling fossil-free living within one generation.“I am pleased that our first SEK-denominated green transaction engaged so many Nordic investors that will now join Vattenfall in driving the energy transition forward,” Vattenfall’s CFO Kerstin Ahlfont commented on the new hybrid bonds.

    The Hybrid Green Bond

    Vattenfall, one of the largest offshore wind developers in the world, issued SEK3 billion through a 2083 floating rate note that pays a coupon of 180 basis points (bps) over the 3-month Stibor and was priced at par. The hybrid bond can be called on 26 May 2028 and comes with an optional redemption at par on any date in the 6-month period prior to and including the 2028 Call Date and every quarterly Interest Payment Date thereafter, together with any Arrears of Interest and any other accrued and unpaid interest.

    The issuer borrowed another SEK500 million in 2086 fixed-rate notes with a 2.4% coupon, which were priced at a 99.873 discount 180bps over mid-swaps to yield 2.42%. The hybrid fixed rate notes have a first reset data of 26 May 2028, an optional redemption at par on any date in the 6-month period prior to and including that date and every annual Interest Payment Date thereafter, together with any Arrears of Interest and any other accrued and unpaid interest.

    In terms of its equity treatment, half of the issuance amount can be treated as equity and the other half as debt. Citi, SEB and Swedbank acted as joint bookrunners on the bond issue. Aside from its investments, Vattenfall has also announced it intends to use SEK2.8 billion to repurchase some of the SEK6 billion hybrid bonds outstanding.

    Image courtesy of Vattenfall

    Filipe Albuquerque
    Filipe is an economist with 8 years of experience in macroeconomic and financial analysis for the Economist Intelligence Unit, the UN World Institute for Development Economic Research, the Stockholm School of Economics and the School of Oriental and African Studies. Filipe holds a MSc in European Political Economy from the LSE and a MSc in Economics from the University of London, where he currently is a PhD candidate.

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