Iberdrola Raises €1 Billion in First EuGB-Compliant Hybrid Green Bond

Spanish energy company Iberdrola has completed the world's first hybrid green bond issued under the European Green Bond standard, raising €1 billion with a coupon of 3.75%—the lowest for any hybrid bond issued so far this year. The offering attracted an order book exceeding €8 billion from more than 400 investors across Europe, the UK, Asia and North America.

The EuGB regulation, effective from December 2024, establishes a gold standard for green bonds in the EU, requiring all proceeds to be invested in activities aligned with the EU Taxonomy. A 15% flexibility pocket permits investment in activities that comply with taxonomy requirements but fall in sectors without established criteria. Issuers must also follow strict transparency requirements, including disclosure of how proceeds will be used and a commitment to a green transition plan with annual reporting on contribution to those plans.

Iberdrola is one of the world's largest corporate green bond issuers, with sustainable financing exceeding €60 billion at end-2024 and 94% of its financing in 2024 classified as sustainable. The strong investor demand for this inaugural EuGB hybrid bond—eight times oversubscribed—demonstrates the market appetite for instruments that meet the regulation's rigorous transparency and taxonomy-alignment requirements. The oversubscription allowed Iberdrola to issue more than initially planned and significantly reduce its cost of capital.

The successful debut of an EuGB-aligned hybrid green bond marks a potential turning point for the European green bond market, which has previously faced questions about the pace of take-up of the new standard. As the EU Taxonomy matures and more sectors receive established criteria, the EuGB standard is expected to attract greater issuance volumes. For sustainable finance markets in Asia and India, the Iberdrola transaction signals the premium that investors attach to the highest-integrity green bond frameworks.

Key figure — €8 billion order book, more than 8x the €1 billion raised