Gasunie Awarded for its Innovative Sustainability-Linked Bond
Published: November 29, 2021
The recently launched Sustainability-Linked Bond (SLB) of Gasunie has won the DACT Treasury Award 2021 after an exciting competition. This SLB, the first ever issued by a European gas transmission system operator, received the most votes from the members of the Dutch Association of Corporate Treasurers (DACT). Avery Dennison and VodafoneZiggo came second and third respectively.
The DACT Treasury Award is presented for the second consecutive year. Members of the DACT could nominate Treasury projects and transactions for this election. All entries were judged on several criteria: Innovation, Inspiration and Environment, Sustainability & Governance.
Gasunie CFO Janneke Hermes: "Gasunie is a key player in the Dutch and German energy transition, with an investment portfolio of € 7,5 billion until 2030. We are also working intensively on reducing CO2 and methane emissions in our gas networks and storage facilities. By attaching not one, but two ambitious emission reduction targets to our SLB framework and our first SLB, we are really ‘putting our money where our mouth is’. We appreciate that the members of DACT recognise this."
About the issue
Gasunie's investment portfolio for this decade includes large-scale energy transition projects, including investments in existing gas transport and storage infrastructure. It is still too early to set up a framework for green bonds, as the proceeds can only be invested in projects that are 100% green. An SLB framework is a useful alternative, which combines 'grey' financing with 'green' objectives.
Gasunie's investment portfolio for this decade includes large-scale energy transition projects and investments in existing gas transport and gas storage infrastructure. At the same time, inspired by the UN Sustainable Development Goals, Gasunie has formulated social impact goals for its daily operations. Gasunie's first SLB combines 'grey' financing with 'green' objectives and links the interest level to the achievement of various impact KPIs.
Gasunie and its Sustainability Structuring Advisors[1] chose two ambitious KPIs; relevant, core and material for both the company and society. The first is to reduce its own methane emissions by almost 50% by 2030 compared to 2020. The second is the reduction of scope 1+2 CO2 emissions in a variable formula, amounting to a 30% reduction in 2030 compared to 2020 if the transported gas volumes were the same in both years.
In the developing market for sustainable bonds, Gasunie and its banking consortium[2] faced the challenge of launching Gasunie's inaugural SLB with a sub-benchmark volume of € 300 million. An additional complexity was Gasunie's ambition for a long-term maturity of 15-20 years.
Following discussions with investors, Gasunie launched a 15-year SLB linked to both KPIs, with a penalty of 10bps for each KPI not met. This resulted in a total maximum penalty of 100bps. With a final order book of € 754 million, this strategy proved successful. It resulted in a spread of mid-swap + 38bps, which amounts to 2-3bps of 'Greenium'.
[1] ABN AMRO and NatWest.
[2] ABN AMRO, Crédit Agricole and ING.