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.”

Disclaimer

This article has been prepared for information purposes only, does not constitute an analysis of all potentially material issues and is subject to change at any time without prior notice. NatWest Markets does not undertake to update you of such changes.  It is indicative only and is not binding. Other than as indicated, this article has been prepared on the basis of publicly available information believed to be reliable but no representation, warranty, undertaking or assurance of any kind, express or implied, is made as to the adequacy, accuracy, completeness or reasonableness of the information contained in this article, nor does NatWest Markets accept any obligation to any recipient to update or correct any information contained herein. Views expressed herein are not intended to be and should not be viewed as advice or as a personal recommendation. The views expressed herein may not be objective or independent of the interests of the authors or other NatWest Markets trading desks, who may be active participants in the markets, investments or strategies referred to in this article. NatWest Markets will not act and has not acted as your legal, tax, regulatory, accounting or investment adviser; nor does NatWest Markets owe any fiduciary duties to you in connection with this, and/or any related transaction and no reliance may be placed on NatWest Markets for investment advice or recommendations of any sort. You should make your own independent evaluation of the relevance and adequacy of the information contained in this article and any issues that are of concern to you.

This article does not constitute an offer to buy or sell, or a solicitation of an offer to buy or sell any investment, nor does it constitute an offer to provide any products or services that are capable of acceptance to form a contract. NatWest Markets and each of its respective affiliates accepts no liability whatsoever for any direct, indirect or consequential losses (in contract, tort or otherwise) arising from the use of this material or reliance on the information contained herein. However this shall not restrict, exclude or limit any duty or liability to any person under any applicable laws or regulations of any jurisdiction which may not be lawfully disclaimed.

NatWest Markets Plc. Incorporated and registered in Scotland No. 90312 with limited liability. Registered Office: 36 St Andrew Square, Edinburgh EH2 2YB. Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and Prudential Regulation Authority. NatWest Markets N.V. is incorporated with limited liability in the Netherlands, authorised and regulated by De Nederlandsche Bank and the Autoriteit Financiële Markten. It has its seat at Amsterdam, the Netherlands, and is registered in the Commercial Register under number 33002587. Registered Office: Claude Debussylaan 94, Amsterdam, the Netherlands. Branch Reg No. in England BR001029. NatWest Markets Plc is, in certain jurisdictions, an authorised agent of NatWest Markets N.V. and NatWest Markets N.V. is, in certain jurisdictions, an authorised agent of NatWest Markets Plc. NatWest Markets Securities Japan Limited [Kanto Financial Bureau (Kin-sho) No. 202] is authorised and regulated by the Japan Financial Services Agency. Securities business in the United States is conducted through NatWest Markets Securities Inc., a FINRA registered broker-dealer (http://www.finra.org), a SIPC member (www.sipc.org) and a wholly owned indirect subsidiary of NatWest Markets Plc.

Copyright 2022 © NatWest Markets Plc. All rights reserved.

Related client stories

SUEZ’s debut green benchmark

A major player in environmental services, SUEZ supports local authorities and industry worldwide in managing essential services around water and waste. The French group is committed to optimising resource use by exploiting the full potential of new and digital technologies, recycling, recovering value, producing secondary raw materials and alternative resources, and helping its customers in the transition to a circular economy.

Jigsaw’s debut sustainability bond to help cut emissions

Jigsaw Homes owns and manages approximately 35,000 homes across the North-West, and East Midlands. The housing association, one of the largest in England, focuses on building, renovating, and managing affordable housing for rent and sale, with 82% of its turnover coming from social housing lettings. Having completed more than 3,000 new homes in five years up to March 2021, Jigsaw is aiming to build another 4,000 homes over the next five years.

IADB’s successful return to Sterling market with £500m Bond

The Inter-American Development Bank (IADB) is the leading source of development finance for Latin America and the Caribbean. Dating back to 1959, the IADB provides loans, grants and technical assistance for countries seeking to reduce poverty and inequality by improving health services, education and infrastructure.