Client stories

Ørsted powers up euro market with green dual-tranche bond

The world’s most sustainable energy company

Headquartered in Denmark, Ørsted develops, constructs, and operates offshore and onshore wind farms, solar farms, energy storage facilities, renewable hydrogen and green fuels facilities, and bioenergy plants. Moreover, Ørsted provides pioneering energy products to its customers around the world.

Ørsted has been ranked the world’s most sustainable energy company in the Corporate Knights Global 100 Index since 2019 and is recognised on the CDP Climate Change A List as a global leader on climate action.

Ørsted, which is 50.1% owned by the Government of Denmark, is also the only energy company in the world with a science-based net-zero target, as validated by the Science-Based Targets initiative (SBTi), that covers its entire value chain: it aims for net-zero emissions across its full value chain by 2040, and is on track to be carbon-neutral in energy generation and operations by 2025.

Investors welcome Ørsted’s return

Looking to issue a dual-tranche green bond after last tapping into the euro senior market in 2017, Ørsted asked NatWest to support the transaction in the role of Active Bookrunner.

With a recent slowdown in supply given European holidays and launching its bonds early in the month when investors had new cash allocations and appetite for new issuances, Ørsted’s excellent timing for its return to the euro market paid off: the orderbook for both tranches grew steadily after the transaction was announced and topped at €4.4 billion, which allowed Ørsted to considerably tighten the price.

On the back of the strong demand, the energy company set the sizes at €600 million for the 6-year tranche, with a coupon of 2.250%, and at €750 million for the 11-year tranche, with a coupon of 2.875%.

The 6-year tranche was led by accounts from DACH countries taking 38% of the allocation, followed by French investors with 24%. Meanwhile, 39% of the 11-year tranche’s allocation went to French investors, 25% to DACH countries, and 23% to investors in the UK and Ireland – with significant demand from insurance and asset managers.

The proceeds of the two green senior bonds, issued under Ørsted’s Green Finance Framework, will go towards financing the company’s global build-out of renewable energy and green growth ambition of reaching approximately 50GW of installed capacity by 2030.

NatWest also behind funding package for Ørsted’s Borkum Riffgrund 3 wind farm

In October 2021, offshore wind company, Ørsted, secured planning approval for its 900MW Borkum Riffgrund 3 offshore wind farm in the North Sea.

Approximately 53km off the coast of Borkum Island, the wind farm will be located adjacent to the existing Borkum Riffgrund 1 and the Borkum Riffgrund 2 wind farms. Expected to become operational in 2025, it will generate enough clean electricity for approximately 920,000 German households while reducing up to three million tonnes (Mt) of CO2 emissions annually.

The wind farm, the largest offshore wind farm for Ørsted in Germany, will be built and operated without subsidies. This is made possible by a set of cost drivers including the installation of next generation wind turbine technology, very good site conditions and high wind speeds, grid connection costs not being part of the project, and the potential for stabilising revenues through corporate power purchase agreements (PPAs). So far Ørsted has signed corporate PPAs for over 600MW of the total capacity.

On the back of NatWest proven capabilities in the offshore wind financing and having supported Ørsted with several transactions in the past, the Danish energy company mandated NatWest as Sole Financial Advisor to arrange and manage the debt financing package. As a result, the NatWest team was able to secure commitments of around £1.2 billion from a group of eight selected lenders.

Green energy holds unprecedented opportunities for positive change

Kasper Kiim Jensen, Vice President Ørsted, said: “We’re delighted with the support we have received from high quality investors, thereby helping with the urgent shift from fossil-based energy sources to energy systems based on renewable energy sources. Building green energy not only is key to successfully tackling climate change but also holds unprecedented opportunities for positive change – for creating growth in economies, revitalising local communities, and making a net-positive contribution to biodiversity.”

Thomas Hansson, NatWest, said:“We are thrilled to have been able to support our customer, Ørsted, again; this time with their dual tranche Green Bond, which attracted high quality ESG investors, underlining Ørsted’s strong ESG credentials, green ‘use of proceeds’ format and rarity value.”

Dr Arthur Krebbers, NatWest, said:“Sustainability is of paramount importance to our business, our customers and the economies we operate in, and we continue to proactively support those on their journeys towards sustainable operations. This transaction aligns with NatWest’s ambition to play a leading role in championing climate solutions. As such we’re committed to provide an additional £100 billion of climate and Sustainable Funding and Financing between July 2021 and the end of 2025.”


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