Global energy and electricity provider Iberdrola announced that it has raised €400 million in a new green bond offering, with the bonds linked to the company’s share price, enabling investors to benefit from the performance of its shares.

The new 5-year bonds are indexed to Iberdrola’s share price through the incorporation of a call option, with investors able to exercise in the three months prior to maturity. Iberdrola said that in order to avoid dilution for its current shareholders, the option will be exercisable by payment of the difference, with the company planning to acquire a hedging option identical to the one sold within the bond. The company added that the combination of the share-linked bond and the option purchase offers cost advantages over traditional financing while eliminating risk. The coupon on the bond was set at 1.5%.

Iberdrola is one of the largest corporate issuers of green bonds, using the instruments to fund projects including renewable energy, energy efficiency, clean transportation and waste management.

The company announced plans in 2021 for its financing structure to have an increasingly higher percentage of green and sustainable products, estimated to account for nearly two-thirds of its debt by 2025. In 2024, 94% of the financing signed by the company was sustainable, with the group’s sustainable financing as of the end of 2024 exceeding €60 billion, including €22.9 billion of green bonds, €15.6 billion sustainable credit lines, and €6 billion sustainable commercial paper, in addition to green and sustainable bank loans, and green structured finance and multilateral loans.

Iberdrola announced plans last year for a major electrification-focused investment program, pledging to allocate €41 billion in its network and renewable energy from 2024 through 2026, with approximately 60% allocated to network-based growth including distribution and transmission, and with more than 40% of the investment anticipated to be allocated to the U.S.