SUEZ issued its inaugural €2.6bn Green Bond, unprecedented deal in the sector

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Natixis acted as Global Coordinator and Sole Green Structurer for the issuance of EUR 2.6 bn triple tranches Green Bond devoted to refinance part of Suez acquisition , the largest in the water and waste utility sector and the 2nd largest EUR Green Bond in 2022.

On May 16th, SUEZ, a global leading player in water and waste management, successfully issued its inaugural Green Bond, fully dedicated to refinancing part of its financial debt which initially financed whole or part of Eligible Green Projects, consisting in the acquisition of eligible entities and activities according to Suez’s Green Bond Framework.

For a total amount of EUR 2.6 bn, this Green Bond is made up of three tranches:

  • EUR 750 million at a fixed rate with a maturity of 5 years, with an annual coupon of 1.875%
  • EUR 850 million at a fixed rate with a maturity of 8 years, with an annual coupon of 2.375%
  • EUR 1 billion at a fixed rate with a maturity of 12 years, with an annual coupon of 2.875%

After a two-day long roadshow and over 70 investors met, Suez launched the transaction the following week, despite challenging market conditions and heighted volatility in relation to series of unsettling economic and geopolitical events (i.e. central bank’s tapering announcements, soaring inflation, new lockdown measures in China and the war in Ukraine).

Suez seized a favorable window and attracted a combined orderbook of c. €7.5bn [3], from more than 200 institutional investors based across Europe, achieving a 2.9 times oversubscription and a 30-35bps tightening.

The transaction is unprecedented in terms of size in the water and waste utility sector and is the 2nd largest green bond in 2022, illustrating the market’s confidence in Suez’s credit and sustainability profile. An additional innovative feature is the use of proceeds dedicated to refinance the acquisition of green eligible entities and businesses. The transaction attracted a strong appetite from ESG investors, particularly from the advanced investors with sustainability-themed and impact-oriented strategies who run dedicated funds and liquidity pockets.

SUEZ published its Green Bond Framework, which benefits from an SPO provided by Sustainalytics, with the ambition to be an active player on sustainable finance market with repeated issuances. The Framework includes all water activities [1], from water production to wastewater management, some waste activities, from waste collection to treatment (excluding landfills and some EfW facilities [2]), and its digital solutions with Smart Environmental Solutions activities. 

 

To go further:

[1] Excluding systems and facilities for fossil fuel operations

[2] Energy from Waste (EfW) facilities for the generation of electricity and/or heat included in the Framework should meet following criteria:

  • The carbon footprint of the energy produced is lower than 100 gCO2/kWh; and
  • In accordance with the waste hierarchy, i.e. facilities located in countries where there is public waste management system in place