Sustainability-linked bonds issued by the Lithuanian state-owned energy transmission and exchange group EPSO-G have been listed on the Nasdaq Baltic Bond List by Nasdaq Vilnius as of June 15, 2022. This is the first sustainability-linked bond issue in the Baltic States.
The size of the sustainability-linked bond issue is EUR 75 million. The five-year bonds with a coupon of 3.117% were purchased by institutional investors from Lithuania, Latvia, Estonia and Sweden. The European Bank for Reconstruction and Development (EBRD) purchased almost one third of the issue for EUR 22.5 million. The bond issue matures on June 8, 2027. Swedbank served as the distributor and organizer of the bond offering.
“Nasdaq congratulates the Lithuanian state-owned energy transmission and exchange group EPSO-G on its successful debut on the public capital market. This is the first-ever issue of sustainability-linked bonds by a Baltic issuer,” says Saulius Malinauskas, the President of Nasdaq Vilnius. “We hope EPSO-G will be an inspiration for other state-owned companies to also see publicly listed securities as an effective way to support their strategic ambitions.”
EPSO-G’s CFO and interim CEO, Algirdas Juozaponis, says the funds raised from the bonds will help finance strategic energy projects the group is implementing which are important for building up Lithuania’s energy independence. “Issuing sustainability-linked bonds added more diversity to EPSO-G’s financing sources and will be important for enabling the group to reach its sustainability goals by making the transmission grids more reliable, reducing environmental impact, and accelerating the drive toward climate-neutral energy,” Juozaponis explains.
Sustainability-linked bonds are a recent innovation in the international bond markets. The borrowing conditions for the issuance of this type of bonds depend not only on a company’s financial sustainability, which is indicated by its credit rating, but also on the environmental, social and governance sustainability goals it has set. If the company was to fail to meet these targets, the actual cost of servicing the debt would be higher.
In preparation for the bond issuance, the rating agency Moody’s Investors Service has assigned Baa1 credit rating with a stable outlook to EPSO-G. The assigned high investment grade rating reflects the strong financial position of the state-owned Group, its relatively low debt level and the fact that the majority of its revenue derives from regulated transmission network activities.
