7 questions about first Gasunie green bond
News article
On Wednesday 8 November, Gasunie entered the financial markets with its first green bond. The goal was to raise 300 million euros that would be used to finance sustainability projects like the hydrogen network and WarmtelinQ. Within a few hours, six times the required number of investors had expressed their interest, explain Jurriën Appers and Rick Mulder from the Treasury Front Office.
1. Why is Gasunie borrowing money on the market for energy transition projects?
‘There’s so much going on in the energy transition. And even though we’re a state-owned company and receive grants, we’ll still need at least 8.5 billion euros until 2030 to be able to carry out all the assignments. We finance this with equity and borrowed capital. Borrowed capital may come from bank credit, but also from investors through bonds. We’ve been financing our work like this for a very long time.’
2. A new aspect is that this is a green bond. What’s the difference with sustainability-linked bonds?
‘For sustainability-linked bonds, which we’ve issued in the past, we agreed certain sustainability goals with the investors, which Gasunie will have to meet. But we can use the funds raised for all kinds of projects. The money we raise with green bonds is exclusively intended for sustainability projects. Fellow companies with an electricity grid, like TenneT, Enexis and Alliander, have been issuing green bonds for a while. We are the first gas TSO in the eurozone to have issued a green bond.’
3. For which projects are these funds intended?
‘Well, we’ve made investment decisions for the first section of the Dutch hydrogen network, which the King officially launched in Rotterdam in October 2023. The construction of WarmtelinQ – the heat pipeline from the port of Rotterdam to The Hague and Leiden – has also started. Furthermore, the plans for carbon capture and storage in empty gas fields under the North Sea are also becoming more tangible with Aramis and with Porthos, which recently started.’
4. There was a lot of interest in the green bond. The banks involved called it one of the most successful issues in recent months. Why is the Gasunie green bond so popular among investors?
‘A green bond, which is directly linked to a sustainability project, reaches a larger group of investors than usual. The bond meets a number of European financial sustainability standards. Investors can use it to meet their own ESG targets for sustainable investments. This allowed us to raise enough funds on favourable terms.’
5. Gasunie prioritised Dutch investors when allocating the green bond. Why?
‘We believe this is important, as most of our energy transition activities take place here. This is where we’ll be digging. We also investigated the investment policies of the buyers. 63% of the units were eventually sold to ‘green’ parties. Furthermore, we mainly selected investors who are known to view us as a long-term investment.’
6. Take us back to 8 November. How did that day go?
‘Our plan was to enter the market with our green bond on Wednesday 8 November, but you don’t give a go or no go until the morning. Due to the developments in Israel and Gaza, the financial markets were nervous, but the Monday and Tuesday before had been good days. Together with the three banks supporting us – ABN AMRO, ING and Credit Agricole – we were keeping an eye on that. They advised us whether or not it would be wise to issue the bond that day. Fortunately the advice was positive.’
7. What happened after this go live?
‘We saw the order book rise pretty quickly. We needed 300 million euros, but at 11 o’clock we were already at 700 million. We then surpassed one billion and eventually even went towards 2 billion. That makes you very happy. It allowed us to lower the interest rate a little bit. Not only are the terms favourable to us, it’s also a nice deal for our investors. We’d all been working towards this for months and the issue was a great success. We’ve now acquired a taste for it!’