Record demand for the green bond with a 4.30% coupon issued by the Eni group for a nominal amount of 2 billion euros. The offer, closed early on 20 January, recorded demand for over 10 billion euro from over 300,000 investors, setting the Italian record for a single tranche corporate bond issue intended for retail. Small savers rushed to subscribe to the bond with an attractive rate and good liquidity on the market also because this type of offer is rare. The bonds of large groups envisage, in the vast majority of cases, very high minimum denominations above 100 thousand euros which therefore block access to small portfolios. The issue qualifies as the first in the sector in sustainability-linked format intended for the retail public, further consolidating the link between Eni’s financial and sustainability strategy. An integration that the company established in 2021 by launching the first Sustainability-Linked Financing Framework worldwide in its sector, which served as a reference for linking multiple financial instruments to relevant objectives of Eni’s decarbonization strategy.
What to know
The bonds, with a duration of 5 years, will be issued on 10 February 2023 for an amount of 2 billion euros at a price equal to 100% of their nominal value. The Bonds will pay a gross annual coupon of 4.30% which will remain unchanged until maturity in the event of the achievement of the sustainability objectives relating to the installed capacity for the production of electricity from renewable sources and the Upstream Net Carbon Footprint (Scope 1 and 2 ), as indicated in the Information Prospectus.
In the event of failure to achieve even just one of the two targets, the interest rate relating to the coupon payable on the expiry date (February 10, 2028) will be increased by 0.50%, according to the methods described in the Information Prospectus. Starting from the issue date, it will be possible to trade the Bonds on the Electronic Bond Market (MOT) organized and managed by Borsa Italiana. It means that the bonds can be bought on the stock exchange as soon as trading starts.
The allotment
There were less than a million applicants for the Eni bond. As per the placement prospectus, the allotment provides that the bonds are assigned in this way: each applicant will be entitled to the minimum lot (2,000 euros) and the residual bonds will be assigned in proportion to the value of the unsatisfied requests. In the event of a further remainder, this will be repaid by drawing lots among the applicants who participated in the proportional distribution. Therefore approximately 620 million euros will be assigned to the approximately 310,000 subscribers to the issue. The remainder, i.e. about 1.4 billion euros, will go “to the individual applicants for the remaining Bonds in proportion to the Bonds requested (and not satisfied) by each of them”. Finally, an extraction mechanism is also envisaged, but – in the light of the registered demand – it is very unlikely that it will be used. In fact, the prospectus provides that in the event of a further remaining bond, “these will be individually assigned by the Lead Managers to the applicants who have participated in the proportional allotment referred to in the previous point (a) by drawing lots to be carried out, in any case, in ways that allow the verifiability of the procedures used and their compliance with criteria of fairness and equal treatment”.