Renewable Energy Finance: Orsted issues $2bn of green senior bonds to fund its global growth ambitions

The company has issued three separate tranches of green bonds, structured as two tranches of $700mn each, with coupon rates of 3.75% and 3.625%, as well as $600mn at a coupon rate of $3.75%. The bonds were issued on the Luxembourg Stock Exchange and have maturity dates ranging from Sep’31 to Sept’42. 

The proceeds will be utilized for the development, construction, and operation of offshore wind, onshore wind, and solar projects, eligible under the company’s green finance framework. The scope of the proceeds was extended to onshore wind and solar PV assets as well in 2022. Proceeds from the issue not allocated to eligible projects will be transferred to the company's liquidity reserve. The move will support Orsted’s ambition to increase its installed renewables capacity, globally, to 50 GW by 2030. In 2022, Orsted issued $4bn in green and hybrid green bonds, bringing its total issuances during 2017-2022 to ~$9bn. To date, the company has allocated ~$5.5bn billion, of which $1.1bn was allocated in 2022 to assets including the 1.3 GW Hornsea 2 offshore wind farm in the UK, which was operationalized in Aug’22, and the 900 MW Greater Changhua 1 & 2a offshore wind farms in Taiwan, which are currently being constructed. The company also deployed funds to its 132 MW South Fork Wind offshore wind farm in the US, which is expected to start producing power later this year, as well as onshore wind and solar PV projects in the country.

Orsted’s financing strategy is focused on tapping the corporate market instead of the project finance markets, as it views the former as more stable and predictable. The average cost of debt for the company has decreased from 3.8% in 2018 to 2.6% in 2022. Apart from green bonds, the company has financed its activities through bank loans and subordinated hybrid capital instruments. Besides the outstanding green bonds, Orsted additionally has an $840 million green revolving credit facility (RCF) to support the construction of its offshore wind projects in Taiwan. This structured financing of the company helps it manage to hold a healthy debt-to-equity ratio of 0.69, as of December 31st, 20’22. 

The above analysis is proprietary to Enerdatics’ energy analytics team, based on the current understanding of the available data. The information is subject to change and should not be taken to constitute professional advice or a recommendation.

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