Greek construction and energy giant GEK Terna is preparing to sell common sustainability-linked bonds with a target of EUR 300 million. The investors will get paid more if the company fails to reduce greenhouse gas emissions by 25% through 2025.
The GEK Terna Group has a plan to boost the capacity of wind farms, photovoltaic plants and electricity storage systems to 3 GW by 2028. Through its member company Terna Energy, as of June 30 it had a portfolio of over 1.3 GW in operation, under construction or ready for construction in Greece, Central and Eastern Europe.
The construction giant, which is also active in the areas of real estate and waste management, announced it would offer common sustainability-linked bonds to be traded at the Athens Exchange. The goal is to raise EUR 300 million, but the issue will be canceled if the demand is lower than EUR 200 million.
Emission cut target is 25% by end-2025
The seven-year green bond sale, which should be completed by December 10, comes with a clause that GEK Terna must lower greenhouse gas emissions by 25% through the end of 2025. It said that if it fails, investors would get an increase in the interest rate of 0.2 percentage points.
The company expressed confidence that its energy projects would contribute to the plan to reduce the environmental and energy footprint.
EnergyPress learned the funds would be used to partially finance an 877 MW gas-fired power plant project in Komotini, which GEK Terna is developing with Motor Oil. The facility is valued at EUR 375 million and it is scheduled to come online in three years.
Energy companies in Greece adding green bonds to portfolios
Terna Energy sold green bonds for EUR 150 million in 2019 to fund its renewable energy projects. National electricity producer Public Power Corp. (PPC or DEI) raised EUR 775 million in sustainability-linked debt securities in March, followed by a EUR 500 million issue in July. It said it would cut greenhouse gas emissions by 40% by the end of 2022 or that it would pay creditors back 0.5 percentage points more in interest.
The National Bank of Greece or NBG issued green bonds of EUR 500 million in total a year ago with the obligation to invest in hydropower, wind parks and photovoltaic projects.
Mytilineos raised EUR 500 million in April in its first green bond issue.
Green or climate bond arrangements are an emerging segment in the global debt market. Companies, governments and financial institutions are turning to the tool to provide funds in line with new, stricter environmental standards. Such projects mitigate climate change and its impact and introduce the principles of circular economy.