Power utility PPC is set to issue – any day now, possibly during the upcoming week – a 500 million-euro Sustainability-Linked Bond, through which it would commit, to investors, to a specified carbon emission reduction.
Given the heightened activity of late by the corporation and its advisors for this issue, it appears PPC believes now is the right time to head to the bond market, as long as no big changes occur on the wider economic front.
The prospective SLB would mark PPC’s return to capital markets following a seven-year absence. It also promises to make the company the country’s first to issue a bond incorporating sustainability terms.
Until just a few weeks ago, PPC was aiming to make its SLB move within the year’s first half, but the company’s prospects have improved further, as reflected by a recent BB- rating from Fitch.
The power utility is now getting started on the implementation of a business plan aiming for a green-energy transformation at PPC.
SLBs differ to green bonds as they are associated with specific indices, including CO2 emission reduction figures throughout an issuing company’s business plan.
PPC does not necessarily expect any great interest rate improvement through the anticipated SLB issue. Instead, looking further ahead, a solid performance by the utility’s SLB in secondary-market trading would enable the corporation to borrow at a lower cost should it return to capital markets at a future date.
PPC’s share price has risen by more than 170 percent over the past year, from 3.28 euros yesterday, representing a market capitalization value of 761 million euros, to yesterday’s closing price of 8.87 euros per share, putting the utility’s market capitalization value at 2.057 billion euros.
Besides the bond issue, investors are also expecting a list of second-round qualifiers, from 11 possible suitors, in the sale of a 49 percent stake of distribution network operator DEDDIE/HEDNO, a PPC subsidiary. Second-round qualifiers are expected to be announced once PPC has completed its qualification process, seen requiring a few more weeks.