Italy's Enel Is Set to Hit Its Goal With First Batch of Climate-Linked Bonds

(Bloomberg) -- Enel SpA says it expects to achieve its renewable energy targets after the first-ever sustainability-linked bonds met their deadline. 

The Italian utility’s installed capacity of renewable energy plants needed to have hit at least 55% of total capacity by the end of 2021 to avoid a coupon step-up on about $3.7 billion of sustainability-linked bonds in dollars and euros. Enel’s ultimate target is to hit 100% by 2040, according to its strategic plan.

“We do not expect any issue in achieving the target since the figure was 54.9% as of September 30th, 2021 and the estimated figure as of December 31st, 2021 is 58%,” an Enel spokesperson told Bloomberg News, citing a company presentation.

The securities, issued back in the fall of 2019, were the first sustainability-linked bond issues, kickstarting a market that ballooned to almost $130 billion last year, according to data compiled by Bloomberg. Such bonds typically penalize borrowers that fail to meet climate targets with an automatic increase in financing costs. However, sustainability-linked debt has also come under scrutiny for potentially soft targets.

Enel “will be able to confirm the achievement of the target in the coming months” once 2021 full-year results have been consolidated, said the spokesperson. The company is due to release preliminary data for 2021 on Feb. 3, with the annual report following on March 17.

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