Electricity

France’s EDF sells Europe’s first green bonds for nuclear energy

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Published

December 1, 2023

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Published:

December 1, 2023

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The European Union’s green taxonomy and subsequent legislation opened the way for nuclear energy projects to get green financing. After its first green loan for the purpose, French state-owned power utility EDF raised EUR 1 billion through a green bond issue, the first of its kind in Europe.

EDF launched a senior green bond issue for its existing nuclear fleet, for a nominal amount of EUR 1 billion, with a 3.5-year maturity and a 3.75% fixed coupon. Net proceeds will be used to refinance capital expenditures in existing French nuclear reactors in relation to their lifetime extension, the government-controlled energy company said.

The issue is aligned with the EU taxonomy, the statement adds. It is the first in Europe. After heated discussions, the EU allowed through its green taxonomy in 2022 for some nuclear energy projects to be labeled green. The endorsement continued with subsequent legislation.

After the taxonomy was adopted, EDF immediately included the technology in its green financing framework. It also took a green loan for the purpose in November 2022.

Market trading starts next week

The transaction enables the further strengthening of the structure of the balance sheet, EDF added. The bonds will be admitted to trading on the regulated market of Euronext Paris on December 5.

The company said it expects the bonds to be rated BBB / Baa1 / BBB+. It would match the group’s credit scores at S&P, Moody’s and Fitch, respectively.

Bloomberg reported earlier that EDF sought to raise at least EUR 500 million. The issue was several times oversubscribed. EDF issued the equivalent of EUR 10 billion in green bonds in the past ten years, according to its website.

The bonds are technically green, but they are specifically earmarked for nuclear energy rather than a variety of renewables and climate action, as many investment funds and banks don’t buy such securities.

EDF wants in on Slovenia’s nuclear power plant project

In other news from the sector, Canada indicated it would issue green-nuclear bonds by the end of March. It is the first time a sovereign borrower included the technology in its framework. The government sold its first green bonds in March 2022. Canada is the home of the world’s inaugural green-nuclear bond package, issued in 2021 by Bruce Power.

As for EDF, it has just signed several agreements with Canadian, Czech, French, Indian, Polish and Italian companies. The deals are aimed at developing local supply chains for EPR technology (European pressurized reactors) and the small modular reactor (SMR) projects of its Nuward subsidiary.

Furthermore, it proposed to Slovenia’s GEN energija to support the construction of two EPR1200 units and alternatively one EPR unit.

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