How are Eni’s perpetual bonds going
Eni perpetual bonds: numbers, comments and analysis
A bet on the future after Covid . It was launched by Eni, which yesterday concluded the placement of two hybrid perpetual subordinated bond issues with a total nominal value of 3 billion euros (the “Hybrid Issue”).
The emissions are intended to finance the future needs of the Six-legged Dog, engaged in the energy transition, and to maintain a balanced financial structure. Let's go step by step.
THE PLACEMENT
Eni has launched two hybrid subordinated perpetual bond issues with a total nominal value of 3 billion euros. For the transaction, the largest placement of hybrid bonds ever issued by an Italian corporate company, the group made use of a syndicate of banks composed of Barclays, BNP Paribas, Citi, Goldman Sachs, HSBC, Santander, SMBC Nikko and UniCredit , as specified by the Corriere della Sera .
THE QUESTION
The placement was a success. The demand for this subordinated financial instrument that has no maturity was 14 billion, so high that the company increased the initial amount from 2-2.5 billion to three billion equally distributed over the two bonds. Eni snatched a rate of 2.75% on the 5-year tranche and 3.375% on the nine-year one, reports Repubblica .
Investors involved are more than 800 investors involved from the main European countries and Italy, interested in the issue.
"An excellent result that in the middle of the pandemic gives us a hand in managing the company's long-term transition plan and improves our credit profile", commented Francesco Gattei, Eni's financial director, specifying that these bonds "allow us to strengthen equity and reduce its debt ratio, which fell from 0.37% to 0.27%, without diluting the shareholders ”.
NEGOTIATIONS IN LUXEMBOURG
The bonds have been placed on the Eurobond market, are regulated by English law, will be traded on the Luxembourg Stock Exchange and the expected settlement date is 13 October 2020.
THE CHARACTERISTICS OF THE TWO OBLIGATIONS
Going into the details, a first bond is of the amount of 1.5 billion euros with a non-call period of 5.25 years, with a re-offer price of 99.403% and an annual coupon of 2.625%, until the first reset date scheduled for January 13, 2026 (the “5.25-year Non-call Hybrid Bond”).
The second bond is still in the amount of 1.5 billion euros, but with a "non-call" period of 9 years, with a re-offer price of 100% and an annual coupon of 3.375% until the first date reset scheduled for October 13, 2029 (the "9-year Non-call Hybrid Bond").
“The company has the possibility to repay each of the hybrid bond loans at any time in the 90 days preceding the relevant first reset date and, subsequently, on any interest payment date; the first reset date for the first bond loan is expected to be 5.25 years after issue (13 January 2026) and for the second bond loan it is expected to be 9 years after issue (13 October 2029) ", explains Eni in a note.
THE TARGET
The bond issue, which raises the group's liquidity to 21 billion, will serve to finance future needs and maintain a balanced financial structure. In recent years, Eni has been committed to revolutionizing its business and implementing an energy transition in compliance with the EU sustainability objectives.
TAX CHANGES
To push Eni to hybrid emissions, explains Il Sole 24 Ore , "the tax changes recently introduced that made the use of these hybrid structures attractive for companies based in Italy, as is already the case in other European markets. ".
"With this transaction, which is part of the 5 billion hybrid bond issue plan by June 2022, the company strengthens the strategy of the new decarbonization plan," adds the financial daily.
THE WORDS OF DESCALZI
“We have had great success with our first hybrid bond placement. The market, albeit in a highly volatile context, recognized great confidence in Eni's financial solidity and energy transition strategy. The equity component of hybrid bonds further strengthens our capital strength and supports our credit profile ”, commented Claudio Descalzi, CEO of Eni.
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/energia/come-vanno-i-bond-perpetui-di-eni/ on Wed, 07 Oct 2020 09:55:02 +0000.