Terna Secures €850 Million in Landmark Green Bond Offering, Signaling Investor Confidence in Energy Transition
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Terna, Italy’s leading electricity transmission system operator, has successfully placed an €850 million perpetual hybrid European Green Bond, attracting over €7 billion in orders – nearly nine times the amount offered. This marks a significant milestone as the first perpetual hybrid issue in Green Bond Standard format for both Terna and the broader Italian market, demonstrating robust investor appetite for sustainable infrastructure investments.
Record Demand and Favorable Terms
The bond offering, exclusively for institutional investors, achieved record-breaking terms, including the lowest subordination premium ever recorded in Europe for a hybrid corporate bond denominated in euros. The spread settled at 123 basis points above the midswap rate, representing a discount of less than 60 basis points compared to equivalent senior debt. This indicates strong market confidence in Terna’s financial stability and future prospects.
Coupon and Regulatory Details
The non-convertible and subordinated security offers a fixed annual coupon of 3.875% until February 2, 2032. Following this date, the rate will adjust to a variable rate with built-in step-up mechanisms if the bond is not redeemed. The first potential reset date for regulation is scheduled for February 2, 2026. “The strong market interest confirms the solidity of our financial profile and the credibility of the industrial strategy,” stated a company release.
Funding the Energy Transition
The proceeds from this bond issuance will be directly allocated to financing or refinancing green projects aligned with the EU Taxonomy and Terna’s established Green Bond Framework. These investments are integral to the company’s 2024-2028 Industrial Plan, which prioritizes strengthening Italy’s electricity infrastructure and supporting the nation’s ongoing energy transition.
The operation falls under Terna’s existing €4 billion EMTN program and will be listed on the MOT (Mercato Obbligazionario Telematico) of the Italian Stock Exchange. Rating agencies are expected to assign the bond a Baa3/BBB rating, reflecting an equity content of 50%.
Strengthening Capital Structure and Sustainable Finance Leadership
With this successful placement, Terna not only bolsters its capital structure but also solidifies its position as a leading force in European sustainable finance. The overwhelming demand for the bond underscores the growing investor focus on environmentally responsible investments and Terna’s commitment to a greener future.
