Engie Raises €850mn from Hybrid Bond Sale

French energy utility Engie issued €850mn ($1bn) in hybrid green bonds on November 19, the company said on December 1, as it seeks to raise financing for its transition towards clean energies.

The bonds have a coupon rate of 1.5% per year, which is the lowest ever achieved by a company for notes with an eight-year maturity, Engie said. The new issue premium of 0.25% below the secondary market price is also one of the lowest the market has ever seen.

Engie received some €4bn in orders for the bonds before the guidance revision, attributing the high demand to its credit quality and the hybrid and green nature of the bonds. The issue was 2.7 times oversubscribed at the final price.

The European Investment Bank was the issue's biggest investor. Some 29% of orders came from Belgium, Luxembourg and the Netherlands, while 17% came from France, 17% from the UK and Ireland, 16% from southern Europe and 15% from Germany. Around 80% of the book was allocated to sustainable investors.

"The success of this transaction, with its historically low coupon, once again demonstrates investors' confident in Engie's signature and its strategic orientations," Engie CFO Judith Hartmann said. "This transaction also confirms Engie's role as a leader in green financing, helping to accelerate the development of its sustainable projects."

Engie is also planning further divestments to fund its transition, including the sale of its 40% stake in LNG technology firm GTT, having already accepted Veolia's €3.4bn ($4bn) offer for its 29.9% stake in water and waste firm Suez in October.

The company has also launched a buyback offer for three of its existing hybrid bonds worth €850mn, which closed on November 25, enabling it to extend the maturity of its hybrid debt by 1.1 years while reducing recurring costs by 0.30% on an unchanged outstanding basis. Engie has raised some €12bn in green financing since 2014.