Iberdrola has launched a €400 million green bond indexed to its share price, maturing in five years with a 1.5% interest rate.
This structured bond allows investors to benefit from the company’s stock performance, offering a call option on Iberdrola shares during the final three months before maturity.
However, Iberdrola will not issue or deliver shares, ensuring no dilution for existing shareholders.
By offering a bond with a call option on its stock price, Iberdrola is effectively reducing financing costs. The hedge through an identical option purchase ensures the company is protected against potential stock price increases, minimising risk exposure.
It’s also noteworthy that Iberdrola has experience with this type of structured debt, having issued similar instruments in 2015, 2020 and 2022.
This issue will involve top-tier banks like JP Morgan and Morgan Stanley, which indicates strong investor confidence in both Iberdrola’s financial stability and its stock performance.
