Client stories

E.ON continues streak of successful green issuances

Connecting everyone to good energy

E.ON Group is one of Europe's largest operators of energy networks and energy infrastructure offering smart, energy efficient products and services for private households, communities, businesses, infrastructure, and mobility.

E.ON’s distribution networks play a significant part in the decarbonisation of society. Between 2022 to 2026, the company, headquartered in Essen, Germany, will invest around €27 billion to expand and upgrade its networks and to offer new services to its customers. This investment program aims to be fully aligned with the EU Taxonomy; in 2021, approximately 95% of E.ON’s investments (based on EU taxonomy eligible capex) have been EU taxonomy aligned.

E.ON is also committed to becoming a greener company itself, having pledged to be climate neutral by 2040. To achieve this, the company plans to reduce its Scope 1 and 2 emissions by 75% by 2030 and 100% by 2040; and Scope 3 emissions by 50% by 2030 and 100% by 2050 (both relative to 2019 baselines).

Strong investor demand underlines E.ON’s strong sustainability story

E.ON returned to the Euro market with a dual tranche green issuance following their last Euro transaction in January this year. E.ON which placed its first green bond in 2019,  approached NatWest to execute their dual tranche, in a challenging market backdrop for other German utilities, following the start of the war in Ukraine.

Working closely together, the NatWest team, who has served as Bookrunner on various E.ON bond transactions in the past, provided investor feedback to the E.ON team, in particular addressing structural questions on the company’s updated framework and the use of proceeds for their green bonds.

Choosing a 3-year and a 9-year tenor for the tranches to complement the energy firm’s maturity profile while also taking into account investor preferences, the combined order books soared to over €3 billion in the first hour of the deal announcement. Demand continued to grow, peaking at €12 billion, which allowed for a significant price tightening of both tranches. E.ON opted for a combined deal size of €1.5 billion, with an equal amount for each tranche. The €750 million green bond maturing in January 2025 received a coupon of 0,875%, while the €750 million green bond maturing in March 2031 comes with a coupon of 1,625%.

Net proceeds for both tranches will be used to finance and/or refinance Eligible Green Projects as defined by E.ON’s Green Bond Framework 2021, which is the very first corporate issuer framework in Europe to align activities to the EU Taxonomy. Eligible projects fall into four categories: 1) Electricity Networks, 2) Renewable Energy, 3) Energy Efficiency, and 4) Clean Transportation. Sustainalytics provided the Second Party Opinion (SPO) for the framework, confirming that it aligns to the Green Bonds Principles 2021 and the EU Taxonomy.

Supporting companies to decarbonise

Henryk Wuppermann, E.ON, said: “We are delighted that investors have demonstrated their continued confidence in our sustainability strategy while also recognising our credit quality. The bond proceeds go primarily towards growing and updating our energy networks. This is where the transition to a low-carbon energy supply is happening: they connect onshore renewables such as solar and wind with consumers and e-mobility charging stations.”

Marco Sterly, Corporate Financing & Risk Solutions, NatWest, stated: “We are pleased for our customer, E.ON, to have achieved such an exceptional outcome, especially bearing in mind a more challenging market sentiment. This was a smooth transaction with a very high number of three-digit orders and strong demand across geographies, highlighting E.ON’s global appeal to investors.”  

Philippe Bradshaw, Head of Syndicate Portfolio and Risk Management Capital Markets at NatWest, said: “We congratulate E.ON for attracting such high calibre investors. The fact that this transaction has seen significant participation from large insurance accounts, which tend to be very selective in deploying their cash and take a very detailed look at the specific Green Bond Frameworks, underlines E.ON’s reputation as a sustainability leader.” 

Daniel Bressler, Climate and ESG Capital Markets, Corporates at NatWest, stated: “We’re excited to have been able to support E.ON yet again with a very successful green issuance.  Climate is of paramount importance to our business, our customers and the economies we operate in, and we continue to support companies, such as E.ON, who are helping our society to decarbonise.”

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