Case studies

Gasunie publishes inaugural Sustainability-Linked Bond

We’re delighted to have supported Gasunie in becoming the first European Gas Transmission System Operator (TSO) to publish a Sustainability-Linked Bond Framework and issue a Sustainability-Linked Bond.

Transitioning from a gas transmission system operator to an energy infrastructure company

Gasunie is a Dutch state-owned gas Transmission System Operator (TSO), operating the infrastructure for the large-scale transport, storage and conversion of gas throughout the Netherlands and northern Germany. The company operates more than 17,000 kilometres of pipelines and receiving stations, conveying approximately 111 billion cubic meters of natural gas annually.

As a gas infrastructure company, not directly involved in the production of gas, Gasunie is playing a central role in the energy transition. Therefore, an increasing share of Gasunie’s focus and management attention is going into the acceleration of a climate-neutral energy supply by investing in projects in the areas of green gas, hydrogen, heating, CCUS (carbon capture, utilisation and storage) and LNG (liquefied natural gas).

Gasunie’s sustainability strategy is geared towards helping to achieve the UN Sustainable Development Goals (SDGs), with four core SDGs at the heart of the company’s Corporate Social Responsibility (‘CSR’) policy: #7 ‘Affordable and Clean Energy’, #9 ‘Industry, Innovation and Infrastructure’, #13 ‘Climate Action’, and #17 ‘Partnerships for the Goals’. To help translate the SDGs into concrete activities, the company has defined nine ‘Gasunie Green Deals’.

Gasusie befits from a good mix of solicited and unsolicited ESG ratings across the three main ESG rating agencies - MSCI: AA/Leader, Sustainalytics: 24.4/Med Risk, ISS ESG: B/Prime. Furthermore, Gasunie has recently stated its commitment to consider setting Science Based Targets once the methodology for the Oil and Gas sector becomes available.

Sustainability-Linked Bond Framework with ambitious SPTs

After signing a Sustainability-Linked Revolving Credit Facility (RCF) in 2020 with its relationship banks, Gasunie was looking to further align its financing strategy with its long-term strategic and sustainability objectives as outlined in its Vision 2030 strategy, and, in doing so, broaden its ESG financing sources.

Therefore, the company turned to NatWest to support with establishing a Sustainability-Linked Bond Framework, the first European gas TSO to do so. In its role as Joint Sustainability Structuring Advisor, the NatWest team worked closely with the Gasunie team to identify the underlying Key Performance Indicators (KPIs) for the framework that are core, relevant, and material to the company’s business and sustainability strategy.

Gasunie selected two KPIs and corresponding Sustainability Performance Targets (SPTs): 1) Methane emissions to not exceed 70 kilotonnes of CO₂ equivalents for the full calendar year 2030; a reduction of ca. 50% versus a 2020 baseline; and 2) A reduction of Scope 1 and Scope 2 greenhouse gas emissions, based on a calculation that uses a fixed and floating element to reflect that Gasunie is partly outside of the control of the volume of natural gas transported through its network. With the methane emissions target Gasunie introduced a new KPI in the market, which represents a key environmental focus area for gas TSOs.

NatWest also helped Gasunie to align their framework with the ICMA Sustainability-Linked Bond Principles (SLBP) and the ICMA Climate Transition Finance Handbook (CTFH). Second party opinion (SPO) provider ISS ESG verified the relevance of the framework’s KPIs and ambitiousness of targets and confirmed that the framework applies the relevant principles.

Investors welcome debut Sustainability-Linked Bond on the back of transparent SLB Framework

Following the publication of its framework, Gasunie prepared for the issuance of its debut Sustainability-Linked Bond (SLB), a first for a European gas TSO, for a volume of €300 million and a 15-year tenor, which the NatWest team supported in the role of Joint Bookrunner.

An ESG investor roadshow with 29 accounts generated very good momentum with investors showing great interest in Gasunie’s sustainability strategy, in particular their hydrogen projects, and their framework. 

The investor engagement paid off: an order volume of over €1 billion allowed to tighten the pricing, with Gasunie setting the coupon at 0,750%. The final spread of ms+38 basis points (bps) represented a Greenium of 2-3 bps.

Overall, 57 investors received an allocation – approximately 89% went to investors outside of the “home” BeNeLux market, with 70% sold to real money accounts.

Following the SLB and the SLB framework, Gasunie intends to become a repeat issuer over the next years in the sustainable debt market, gradually transforming its bond curve. Over time, the company also plans to expand the framework to include a green investment plan, latest market best practices, and supplementary targets.

Proud to support Gasunie as Joint Sustainability Structuring Advisor and Joint Bookrunner

Pietro Stimamiglio, Corporate Financing & Risk Solutions, Sustainable Finance, NatWest, commented: “We are very pleased to have been able to advise Gasunie on establishing their Sustainability-Linked Bond Framework - a crucial step towards raising sustainable debt at the capital markets – and to help our customer with their inaugural Sustainability-Linked Bond. Our support for Gasunie is another example of NatWest delivering on its purpose to champion businesses and actively contributing to social, economic and environmental progress by supporting our customers, such as Gasunie, on their sustainability journey.” 

Thomas Gidman, ESG Advisory, NatWest, added: “We are delighted to have supported Gasunie in their forward-thinking Sustainability-Linked Bond Framework, an important next step in partnering with investors to deliver their sustainability strategy. The increased level of transparency created by the Framework, and equally reflected in their inaugural Sustainability-Linked Bond, highlights Gasunie’s ambition in playing a pivotal role in the sustainable energy system of the future. As a purpose-led bank and sponsor of COP26, NatWest is determined to help customers like Gasunie lead the transition towards a low carbon economy.”

Dr. Arthur Krebbers, Head of Sustainable Finance Corporates at NatWest, stated: “We are excited to have helped our longstanding customer Gasunie become the first regulated European gas TSO to publish a Sustainability-Linked Bond Framework and the first gas TSO to issue a Sustainability-Linked Bond.  At NatWest, we’re at the forefront of helping our customers access sustainable finance through setting up credible and suitable frameworks.”

Janneke Hermes, Chief Financial Officer of Gasunie, said: “Gasunie's total investment agenda for the coming ten years, captured in our Vision 2030, could amount to around €7 billion. More than half of these investments will support the energy transition. We will shortly be taking the final investment decisions for the first projects. I am very happy with the investors who have shown so much interest in making this transaction a success and see it as a sign of confidence in our financing strategy.”

Han Fennema, Chief Executive Officer of Gasunie, added: “We are transforming from a gas transmission company into an energy infrastructure company. Against this background, we now launch this Sustainability-Linked Bond in line with our Vision 2030, clearly communicate our transition strategy and partner with our investors in delivering this strategy. We attach tangible economic incentives to achieve specific sustainability outcomes throughout our transition and decarbonisation process.”

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