Telefonica Places €1.75 bn Green Bond with Triple Oversubscription

Telefonica , a global telecommunications company, has achieved a significant milestone by placing a green bond, raising a total of €1.75 billion. The bond received overwhelming response from the market, with a combined oversubscription that tripled the initial offer.
Telefonica’s 5G network in SpainThe operation was structured into two tranches, demonstrating strong investor confidence. The first tranche, an 8-year €1,000 million transaction, witnessed robust demand from institutional investors, with more than 85 percent coming from outside Spain.

The oversubscription allowed Telefonica to increase the amount from the initial target of €750 million. The final spread improved from 135 basis points to 105 basis points, and the final coupon settled at 3.698 percent.

The second tranche, a 12-year €750 million issuance, also garnered substantial interest from institutional investors, with 95 percent being international. Demand enabled improved conditions, with the spread narrowing from an initial 165 basis points to a final spread of 135 basis points. The coupon for this tranche was set at 4.055 percent.

The closing and final settlement of the transaction is scheduled for January 24th.

Telefonica , commencing the new year with this successful green bond placement, continues its financing strategy after a favorable 2023. The company executed three green issues last year, including two hybrid bonds in January and August for €1 billion and €750 million, respectively, and a senior bond for €850 million in November.

The green bond issuance aligns with Telefonica’s commitment to sustainable financing, aiming to have around 40 percent of total funding by 2026 linked to Environmental, Social, and Governance (ESG) criteria. This commitment underscores Telefonica’s leadership in sustainable financing within the global telecommunications sector.

The funds obtained from the green bond will be allocated primarily to projects for the transformation and modernization of telecommunications networks, focusing on improving energy efficiency. These funds may also support projects related to Telefonica’s Renewable Energy Plan and the development of digital products and services aimed at conserving energy and natural resources.

Telefonica, in adherence to its Sustainable Financing Framework, updated in July and externally endorsed with a favorable Second Party Opinion from Sustainalytics, will report annually on the environmental impact of funded projects. This reporting will include indicators such as energy consumption per petabyte of data traffic, energy savings, and CO2 emissions avoided.

As part of its financing strategy, Telefonica  initially published its Sustainable Financing Framework in 2018, subsequently updated in January 2021 and most recently in July 2023, consistently aligning with market best practices and investor expectations, as confirmed by positive Second Party Opinions from Sustainalytics.