• Iberdrola secures €400 million via a green bond linked to share price performance.
• Investors gain potential upside from share appreciation without shareholder dilution.
• Company hedges risk, achieving cost benefits over traditional financing.

Iberdrola has successfully issued a €400 million green bond indexed to its share price, maturing in five years with a coupon rate of 1.5%.

This bond allows investors to exercise a call option linked directly to Iberdrola’s share price performance in the final three months prior to maturity. Investors will benefit from share price appreciation but will only receive the payment difference, ensuring no dilution effect on existing shareholders.

To mitigate risk and secure a favorable financial structure, Iberdrola simultaneously purchased an identical hedging option. This proactive approach allows Iberdrola to manage potential risks effectively if share prices rise above a specified threshold.

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The deal was facilitated by prominent international banks: JP Morgan, Natixis, Mizuho, and Morgan Stanley.

“By purchasing a hedging option, Iberdrola eliminates the risk and obtains a cost advantage over traditional financing,” the company stated.

This strategic financing structure highlights Iberdrola’s continued innovation in the structured bond market. In 2022, Iberdrola issued a similar green bond worth €450 million, and in 2015, it entered this specialized market with a €500 million issue, later increasing it by an additional €200 million in 2020.

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