Iberdrola restructures debt: sees 47 B euros investment in 2023-2025; hikes weighting of development banks

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Bankinter |Iberdrola’s Strategic Plan contemplates investments of 47 billion euros in 2023-2025, while maintaining generous shareholder retribution in this period (11 billion euros in dividends for shareholders and minorities). This will mean that the group’s Net Debt will go from 45 billion euros at end-2022 to 57.5 billion in 2025. The restructuring of the debt envisages a reduction of the listed debt from 55% currently to 52% in 2025. The banks will take over here, but the traditional financial entities will not be the main protagonists. Iberdrola has detected an opportunity to obtain cheap money from the development banks, export credit agencies and supranational institutions. This alternative financing will reach 11 billion euros in 2025, versus 7 billion currently, and in three years it will account for 18% of the group’s debt. Iberdrola aims to continue working with its traditional counterparts (the EIB, the ICO…)and add some new lenders like Corporación Financiera Internacional (IFC) or the Danish credit agency. amongst others. With regard to hybrids, Iberdrola is commited to maintaining its current portfolio despite the market environment and considers its refinancing on the review dates.

Analyst teams’ view: Iberdrola intends to change the financing mix in the next few years with the aim of gaining flexibility, reducing volatility and optimising its cost. In this connection, the company expects to gradually increase the weighting of development banks, export credit agencies and supranational institutions. These institutions provide long-term financing, in attractive conditions and is not subject to the volatility of the capital markets.

According to its Strategic Plan, the cost of debt could be at 4.3% in 2025, similar to that in 2022 and compared with the 4.9% estimated for 2023. The Net Debt/EBITDA ratio would fall from an estimated 3,7x estimated in 2023 to 3,4x in 2025.

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