Strong demand expressed by Greek and foreign investors for power utility PPC’s five-year, 500 million-euro sustainability-linked bond, whose order book closes tomorrow, suggests the issue will be oversubscribed by two to three times, sources have estimated.
Local brokerage companies are submitting order requests that represent up to three times the size of actual amounts investors have decided to place in this SLB issue in an effort to ensure their clients will get the bond quantities they want.
The level of interest of foreign institutional investors, targeted by PPC as a key group for the success of this bond issue, is expected to be even higher.
Analysts attribute this heightened investor interest to two main factors, firstly the bond issue’s yield, which is expected to close between 3.5 and 4.2 percent, well over levels registered by corporate bond issues of the past few years in eurozone markets; and secondly, the bond’s sustainability terms.
PPC is committing to a 40 percent CO2 emissions reduction by 2022, from 23.1 million tons in 2019 to 13.9 million tons next year. If this goal is not achieved, 50 basis points will be added to the bond’s yield.
The issue’s environmental, social and governance (ESG) factors, even without guarantees, are also a key attraction for investors.
Since the wider outbreak of the pandemic early in 2020, an increasing number of funds have opted to invest in companies observing ESG criteria. Capital amounts invested by funds in companies maintaining ESG criteria have increased by 170 percent since 2015.