In recent years, French energy giant Engie has made a significant commitment to an environmentalist agenda, positioning itself as a leader in enabling its clients to achieve zero-carbon operations. This strategic shift has resulted in Engie becoming the world’s leading corporate issuer of green bonds. With a focus on gas, renewables, and energy efficiency, Engie has established itself as a global leader in zero-carbon solutions.
Engie’s goal is to expand its renewable energy capacity from the current 24 gigawatts to 33 gigawatts. Over the past few years, the company has invested in various renewable energy sources such as wind, solar, biogas, biomass, geothermal, and hydropower. Additionally, Engie has a rapidly growing business in client services, including on-site co-generation, heating and cooling networks, public lighting, and rooftop solar power. It is also the second largest provider of electric vehicle charging stations worldwide.
However, these ambitious endeavors come at a cost. In 2018, Engie recorded profits of €2.5 billion against revenues of approximately €60 billion. The company has raised significant funds through investments totaling around €16 billion over the past three years. Engie has also exited coal and exploration and production, reducing its own carbon emissions by 50%.
Engie’s commitment to green principles extends to its borrowing strategy. The company started selling green bonds in 2014 and has since become the largest issuer of green bonds globally, with approximately €8.5 billion outstanding. While it is challenging to quantify the exact pricing benefit, selling green bonds allows Engie to tap into a larger investor base and generate better momentum in book-building.
Engie’s net debt stands at around €22 billion, compared to €27.7 billion in 2015. The company’s net debt to EBITDA ratio was 2.3 times at the end of 2018, slightly below its target of 2.5 times. Moody’s rates Engie as A3, and Standard & Poor’s rates it as A-. The Moody’s rating was downgraded from A2 in June 2019 following a French law allowing the government to dispose of its shareholding.
Engie typically issues between €2 billion and €4 billion of debt annually, primarily to finance redemptions. In January, the company launched a tender offer to refinance a perpetual hybrid sold in 2014 and replaced it with a green hybrid for Elbn, securing a lower coupon in the process. Engie aims to maintain a smooth maturity profile, with an average maturity of eight years in gross debt terms and closer to 11 years on a net basis.
Engie issues green bonds under the Green Bond Principles, verified by a third party, and has a green bond committee to select eligible projects. The company commits to allocating the proceeds of bond issues within two years for maturities less than 10 years and within three years for maturities exceeding 10 years.
In June 2019, Engie launched a new dual-tranche green bond transaction, appointing BBVA, BNP Paribas, HSBC, ING, and Société Générale as active bookrunners. The company priced €1.5 billion of bonds with an eight-year and 20-year tranche, with final order book reaching €2.9 billion. French investors accounted for approximately 38% of orders, and the bonds were well-received in the secondary market.
Judith Hartmann, Engie’s executive vice-president and chief financial officer, believes that the green bond market is set to grow. Investors are increasingly focusing on environmental and social governance, and Engie’s commitment to greening its portfolio aligns with this movement.
Engie’s green charge in electrifying bond markets reflects its dedication to achieving a sustainable future. As the world’s leading corporate issuer of green bonds, the company’s strategic focus on zero-carbon solutions and its commitment to environmental principles position it at the forefront of the energy transition.