Iberdrola sold a green bond in the Swiss market in June 2024, split into a four-year and a seven-year tranche. By the standards of a company that logged a dozen bond records that year across several markets, it was a small deal. Iberdrola went to the trouble anyway, and the reason says more about how utilities fund themselves than the amount does.
Key takeaways
- Iberdrola issued a green bond in the Swiss market on 25 June 2024 in two tranches: about $212.66 million over seven years at a 1.56 percent coupon and about $162.29 million over four years at a 1.38 percent coupon.
- Strong demand tightened the spread on Iberdrola's Swiss green bond to 47 basis points for the four-year tranche and 62 basis points for the seven-year tranche.
- Leap's record describes the Iberdrola issue as "the first green bond placement in the Swiss market", with UBS and Deutsche Bank acting as coordinating banks.
- Proceeds from the Swiss green bond can finance or refinance eligible renewables, green hydrogen, smart grid, customer efficiency and electric mobility projects across Continental Europe, the UK, the US, Australia and Asia-Pacific.
- Enerdatics records 12 Iberdrola bond records in 2024 totalling about $6.86 billion, and the two Swiss tranches are the smallest two of the year.
How was the Swiss bond structured?
The issue was cut into two maturities so that investors with different time horizons could each buy the tenor they wanted. A tranche is one slice of a bond issue with its own maturity and coupon, sold at the same time as the others. Splitting an issue this way lets the borrower find demand at more than one point on the yield curve rather than forcing every buyer into a single maturity.
The shape of the two slices is telling. The seven-year tranche is the larger of the two, at roughly 57 percent of the combined $374.95 million. Investors who lend for longer usually demand more, and they did: both the coupon and the spread are higher on the seven-year paper. Yet the longer tranche still attracted more money, which suggests that Swiss buyers were looking for duration from a name they were comfortable holding.
A spread is the extra yield a borrower pays above a benchmark rate. Leap records that high demand tightened it, which means the final pricing came in below where the books opened. A spread of 47 basis points over four years and 62 over seven reflects how investors priced Iberdrola's credit in that market at that moment.
Why would Iberdrola borrow in the Swiss market at all?
Because it widens the pool of lenders without changing what the money is for. Iberdrola's use of proceeds for this bond is global. The eligible list covers onshore and offshore wind, solar, hydroelectric and battery storage, green hydrogen, grid investment, heat pumps, building efficiency, distributed generation, smart meters and charging infrastructure, across five regions. None of that spending is in Switzerland.
What the Swiss market offers is a separate investor base with its own appetite and its own rate environment. Leap records coupons of 1.38 and 1.56 percent on the two tranches. The size of the market sets the ceiling. A borrower can raise a few hundred million at attractive terms, but not the sums it raises elsewhere.
That trade-off fits a company with a heavy capital plan. Leap records that Iberdrola had a record investment plan of about $51 billion for 2023 to 2025 and planned to invest $44 billion between 2024 and 2026, focused on grids and renewables. A borrower spending at that rate benefits from every distinct pool of capital it can tap, even a small one, because diversification lowers its dependence on any single market.
How does the Swiss deal fit Iberdrola's green finance record?
It is one more layer in a long-running programme. Leap notes that Iberdrola has issued green bonds since 2014 and describes it as a global benchmark in sustainable finance. The Swiss deal adds a new currency to that record rather than a new kind of instrument.
Earlier in the year Iberdrola had used a different tool for a different purpose. Its $766 million perpetual hybrid bond in January 2024 refinanced existing instruments to keep its hybrid capital stable. The Swiss green bond is plainer senior debt with a defined maturity, earmarked for eligible green spending.
Enerdatics' data shows where the Swiss deal sits in a busy year. Leap logs 18 Iberdrola financings announced in 2024, and 12 of them are bonds with a combined value of about $6.86 billion. They span the UK, Australia, the US, Spain and pan-European markets, and range up to about $845 million for a hybrid green bond in November. The two Swiss tranches, at $162.29 million and $212.66 million, are the smallest two bond records of the year. Even combined, at about $375 million, they fall below half of Iberdrola's largest single bond.
What does the deal signal for utility green bonds?
The deal signals that large European utilities now treat green bond issuance as a portfolio of markets rather than a single source of funding. A company with an eligible project list spanning five regions can issue against it in whichever currency offers the best terms that week. The green label travels with the use of proceeds, not with the currency.
Iberdrola is not alone in looking beyond its home market. Acciona became the first Spanish company to close a Samurai loan in early 2024, as Enerdatics covered in Acciona's Samurai loan, and India's REC split its first yen green bond into several tranches to match local demand. The common thread is that smaller, deep-pocketed markets reward issuers who show up with a credible framework and a recognised name.
For anyone benchmarking utility funding costs, the Swiss tranches are a useful lower bound rather than a typical print. They show what a large, frequent issuer can achieve in a smaller market where its name is scarce. They say less about what the same company pays for the bulk of its borrowing, which happens in larger markets at larger sizes.
Frequently asked questions
How much did Iberdrola raise in its Swiss green bond?Iberdrola raised about $374.95 million in two tranches announced on 25 June 2024: about $212.66 million over seven years at a 1.56 percent coupon and about $162.29 million over four years at 1.38 percent. UBS and Deutsche Bank acted as coordinating banks.
What will the Swiss green bond proceeds fund?The proceeds can finance or refinance eligible projects in Continental Europe, the UK, the US, Australia and Asia-Pacific. Eligible categories include wind, solar, hydro and battery storage, green hydrogen, smart grids, customer efficiency solutions and electric mobility infrastructure.
What is a bond tranche?A tranche is one slice of a bond issue with its own maturity, coupon and size, sold alongside the other slices. Iberdrola's Swiss issue had a four-year and a seven-year tranche, and the longer one paid a higher coupon and a wider spread over its benchmark.
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