EnBW issues hybrid bond with a 60-year term to maturity

Karlsruhe. EnBW Energie Baden-Württemberg AG today issued a bond with a volume of € 750 million. The bond has a term to maturity of approximately 60 years with call options every five years after the first interest payment date. Based on its terms and conditions, the bond will be recognised as equity by some rating agencies, thereby supporting EnBW’s current A rating.

The transaction was structured by Barclays Capital and Deutsche Bank in cooperation with EnBW. The placement was additionally performed by a syndicate of banks comprising Goldman Sachs, Morgan Stanley and Société Générale.

“To make this transaction a success in the currently difficult market environment, it was important to get the timing right. The market was not ready to buy this bond in the last few months, but we seized the window of opportunity when it arose and have also benefited from the month-long preparation for this transaction,” Thomas Kusterer, EnBW’s CFO, explains.

The date of issue will be 28 October 2011, and repayment is scheduled for 2 April 2072. The first interest payment date is 2 April 2012. EnBW has the right to repay the bond prematurely for the first time five years after the first interest payment date and thereafter every five years. The bond is equipped with a coupon of initially 7.375%. EnBW also has the right to suspend interest payments. However, these must be made when EnBW distributes a dividend. The bond will be subordinated to all other financial liabilities.

Hans-Peter Villis, CEO of EnBW: "The bond proves that investors are convinced by our strategy and that they believe that EnBW is in a position to play an active role in shaping the new energy concept. We are very happy about that. With this hybrid bond, EnBW has also strengthened its equity and satisfied another prerequisite for maintaining its A rating.”

At the start of September this year, EnBW had provided investors with comprehensive information about the company and the product at a three-day road show. There was great interest on the part of investors. Due to the high demand, book building was over in just a few hours despite the complicated bond structure and the bond was clearly oversubscribed.