Power utility PPC is preparing to issue a new ESG (Environmental, Social and Governance)-linked bond in July, driven by favorable market conditions and a recent B+ credit rating from S&P, banking sources have informed.
A PPC bond issue in July would capitalize on current market sentiment, still positive. If the Delta variant, a strain of Covid-19 believed to be more transmissible and dangerous than others, continues to spread, a growing number of countries will impose restrictive measures, which would dampen economic recoveries and investment activity.
A second driving factor for an issue in July is the increasing inflationary pressure triggered by economic recovery. The Fed has indicated that this inflationary pressure rise will continue.
Rising inflation combined with solid performances in the global economy suggests the time for interest rate increases is approaching, as indicated by a rise in yields on US bonds.
Internationally, investors believe it is a matter of time before central banks raise interest rates to control inflation rates.
This would be an unfavorable development for countries and corporations, such as PPC, that have managed to borrow at low interest rates.
Given these possibilities, PPC, in the months ahead, may not have the opportunity to achieve a bond interest rate that would be as good or better than the rates achieved with a double issue last March. PPC raised 775 million euros through two ESG-linked bond issues, the first at 3.875% for 650 million euros, and the second at 3.67% for 125 million euros.