Telefonica Launches €850 mn Green Bond, Strengthening Commitment to Sustainable Financing

Telefonica, a leading global telecommunications company, achieved a significant milestone today with the successful launch of a 10-year €850 million green bond.
Telefonica’s 5G network in SpainTelefonica said the offering received an overwhelming response from institutional investors, surpassing initial expectations. With over 200 orders and a book of €2,500 million, the company chose to issue the final €850 million, exceeding the initially planned €750 million.

The conditions for the green bond notably improved from the initial indications, featuring a reduced spread of 110 basis points from the initial 135-140 basis points. The final coupon was set at 4.183%. The transaction is set for final closure and settlement on November 22nd.

This marks Telefonica’s third green bond issuance this year, following placements of two hybrid bonds in January and August amounting to €1,000 million and €750 million, respectively.

Telefonica solidifies its position as a pioneer in sustainable financing within the telecommunications sector, maintaining a robust financing strategy that has preserved a liquidity position of over €20.7 billion as of September’s end. The company has also secured its maturities for the next three years, with an average maturity of 12.3 years, with more than 80 percent at fixed rates.

Telefonica is resolute in its commitment to sustainable financing, aiming to link around 40 percent of its total financing activity to Environmental, Social, and Governance (ESG) criteria. This elevated target, announced during the recent Capital Markets Day on November 8th, surpasses the previously set goal of around 30-35 percent.

Aligned with Telefonica’s Sustainable Financing Framework, validated externally with a favorable Second Party Opinion from Sustainalytics, the proceeds from the green bond will primarily fund projects focused on upgrading and modernizing telecommunications networks, aiming to enhance their energy efficiency. These funds may also support initiatives related to the implementation of Telefonica’s Renewable Energy Plan and the development of digital products and services aimed at conserving energy and natural resources.

Telefonica’s commitment to transparency includes annual reporting on the environmental impact of these projects. Metrics such as energy consumption per petabyte of data traffic, energy savings, and CO2 emissions reduction will be monitored and disclosed.

Telefonica has consistently evolved its financing strategy, first introducing its Sustainable Financing Framework in 2018. Subsequent updates in January 2021 and the most recent in July 2023 reflect the company’s dedication to meeting market best practices and investor expectations. Each update has received a positive Second Party Opinion from Sustainalytics, underlining Telefonica’s commitment to aligning its operations with sustainable practices.