Jumbo Green Deal Wakes Up ESG Market 

(Bloomberg) -- The green bond market is roaring back to life with the biggest-ever corporate sale, pulling in investors starved of ethical debt during this year's market turmoil.

Dutch power company TenneT Holding BV sold 3.85 billion euros ($4.06 billion) of green debt across four maturities Tuesday, to fund greener electricity grids across Europe. It's the largest deal for the environmental debt from a company, topping previous efforts from Honda Motor Co. and Engie SA, according to data compiled by Bloomberg.

“This is a company that is at the heart of the energy transition in Europe,” said Arthur Krebbers, NatWest Markets Plc's head of corporate climate & ESG capital markets. “It is amongst the players helping the German and Dutch economy transition to green, which has never been more topical.”

Investors jumped on the sale, placing more than 8 billion euros of bids, after a dearth of green corporate issuance in Europe following Russia's invasion of Ukraine. Sales in the region through April are 23% down on last year, as issuers step back from raising new debt amid ongoing bouts of global volatility.

TenneT offered notes ranging from 4.5 years to 20 years, according to a person familiar with the sale, who asked not to be identified. Proceeds will fund infrastructure to boost the distribution of renewable energy, with the firm aligning its projects to both United Nations development goals and proposed European Union green bond rules. 

“TenneT has a large capex budget to fund, including for energy transition,” said Scott Freedman, a fund manager at Newton Investment Management. “I think there will likely be a lot more to come from the sector in general.”

The ethical bond has exploded in recent years to be worth over $4 trillion as governments and companies fund projects to cut greenhouse gas emissions, while funds are under regulatory and investor pressure to put their money toward a more sustainable future. European policy makers are also pushing to reduce their energy dependence on Russia.

This year, power firms including E.On SE and Iberdrola SA have sold about 11.37 billion euros of green notes in Europe through the end of April. TenneT is already a regular visitor to the ethical market, with two offerings last year including a 1.8 billion euros three-parter in May.

The investor demand enabled the firm to trim pricing on the 20-year notes to 110 basis points over mid-swaps, inside initial marketing at about 130 basis points, according to the person familar with the deal. That's still much higher than the 67 basis-point spread it paid a year ago, following the global rise in rates.

A TenneT spokesperson wasn't immediately available to comment. ABN Amro Bank NV, BNP Paribas SA, Commerzbank AG, NatWest Markets, Banco Santander SA and UniCredit SpA were the bookrunners on the deal.

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