Despite the disruption in the market created by Covid-19, on Tuesday , the German electricity company successfully placed a 5.5-year maturity green bond with a 1% coupon. The funds will be used to finance investments in network infrastructure and energy efficiency projects. There was strong demand for the bond issue, with the order book over 8 times subscribed.
There are several reasons behind the high demand. Firstly, E.ON’s status as a regulated company with stable revenues. After the exchange of assets with RWE, 80% of E.ON’s business is regulated. Secondly, its good financial structure. Rating agencies S&P and Moody’s have just reaffirmed their BBB/Baa2 rating (respectively), with a stable outlook in both cases. Thirdly, the support of the ECB’s purchases. The central bank has launched an extraordinary asset purchase programme (totalling more than EUR 1.1 trillion of purchases in 2020), which could be extended and expanded if necessary. This purchase programme includes corporate bonds (investment grade).
