More than 300,000 individual Italian investors lined up to buy Eni’s first “sustainable” bond dedicated to retail. The oil company announced the result of the issue on Monday, which started with a target of 1 billion but doubled in the run (to 2 billion) in light of the fact that overall demand was over 10 billion. This is why the subscription – which was scheduled until 3 February – was closed early on 20 February.
The annual rate set at 4.3%
Eventually the rate on the five-year bond was set at 4.3%. “The extraordinary success of the offer testifies to the strong appreciation by Italian investors for Eni’s solidity and for its commitment to the energy transition,” explained a note from the Six-Legged Dog. And the CEO Claudio Descalzi, who yesterday was busy with Prime Minister Meloni in Algeria, commented: “The success of this operation has been extraordinary and surprising. For us, above all, it was a very strong response in terms of trust from the Italian public, and this is the aspect that gives us the greatest satisfaction and that strengthens us. Many Italians have believed in what we are doing, both in terms of progressive evolution towards decarbonised industrial processes and products, and of guaranteeing energy security”.
Sustainability goals
The issue was the first “sustainability-linked” issue aimed at the retail public. It means that the securities, which will be issued on 10 February 2023 for an amount of 2 billion euros at a price equal to 100% of their nominal value, will be able to present a higher coupon, under certain conditions. 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 Net Carbon Footprint Upstream (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 – the note recalled again – it will be possible to trade the Bonds on the Electronic Bond Market (MOT) organized and managed by Borsa Italiana.
The allotment and extraction
The information prospectus explains how the share is allocated, in the event that applications exceed the total amount: a case that has largely occurred. The first criterion provides for the assignment of the Minimum Lot to each applicant. Being of 2,000 euros, simply multiplied by the approximately 310,000 subscribers means an allocation of 620 million euros. Then we proceed with two other mechanisms. The remaining part of the bond (around 1.4 billion) will go “to the individual applicants for the remaining Bonds in proportion to the Bonds requested (and not satisfied) by each of them”, rounding down. As a last resort there is also an extraction mechanism, 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 Placement Managers (these were Intesa Sanpaolo and Unicredit, ndr) to applicants who have participated in the proportional distribution referred to in the previous point (a) by drawing lots to be carried out, in any case, with methods that allow the verifiability of the procedures used and their compliance with criteria of fairness and equal treatment” Extraction which was also envisaged for the assignment of minimum lots in the event of demand such as to make the obligation to satisfy everyone insufficient.