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The energy group Snam issues its first transition bond

This Italian gas transport group has just issued in June 2020 a transition bond, a bond intended to support the transformation of carbon-intensive industries.

Article also available in : English EN | français FR

Snam S.p.A. (rated Baa2 by Moody’s, BBB+ by S&P and BBB+ by Fitch) has successfully launched its inaugural Transition Bond, whose proceeds will be used to finance projects in the energy transition.

Support industries that are transforming their economic model

Let’s reiterate that a transition bond is used to finance projects with an environmental vocation but which do not tick all the boxes to enter the more restrictive framework of green bonds, which appeared more than ten years ago now.

However, these instruments follow the main principles of "green bonds", that is to say a precise marking of the projects financed and a commitment to regular reporting on the use of funds.

Success was there

The idea of ​​supporting companies in the energy sector is generally welcomed by investors, as shown by the success of recent transactions carried out recently.

This is also the case for the Italian group Snam. The issuance, which is reserved to institutional investors, reached more than three times oversubscription by high quality and geographically diversified institutional investors.

Marco Alverà, Snam’s CEO, said : « The success of our first Transition Bond, a market in which we are a global frontrunner, is a sign of the market’s trust in our energy transition initiatives, and encourages us to proceed along this path with even greater determination ».

Through issuing this Transition Bond, which follows the Climate Action Bond issued in February 2019, Snam aims to ensure the company’s financial strategy is fully aligned with the energy transition through its sustainability objectives, as well as to further expand its investor base.

Features of the Transition Bond are as follows:

Amount: 500 M€

Maturity: 17 June 2030

Yield: annual coupon of 0.75% with a reoffer price of 99.856% (equivalent to a spread of 80 bps over the reference mid swap rate)

Bookrunners of the placement: Banca IMI, BBVA, BNP Paribas, BofA Merrill Lynch, Goldman Sachs, JP Morgan, MUFG, Société Générale and UniCredit.

RF , June 16

Article also available in : English EN | français FR

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