Dentons has advised a syndicate of banks on ČEZ’s €750 million sustainability-linked bond issue. The transaction represents ČEZ’s fourth sustainability-linked bond issue, following its debut issue in April 2022 and two further issues in June and September 2024, on which Dentons has acted as English and Czech law counsel to the managers. The bonds are listed on the main market of the Luxembourg Stock Exchange.

ČEZ is one of the largest companies in the Czech Republic and a leading energy group operating in central and western Europe. The ČEZ Group has committed to make the energy sector sustainable and more environmentally friendly. Aside from emission-free production, ČEZ’s main business includes energy distribution and sales, as well as supporting innovation and investments in clean-tech companies.

The proceeds of the bond will be used for general corporate purposes, but ČEZ undertakes that the proceeds will not be used for coal extraction and coal power expansion or maintenance. The key performance indicator for the bond is ČEZ reducing the amount of its carbon dioxide emissions (measured as carbon dioxide equivalent per megawatt hour (tCO2e/MWh)) by 57.5% by the end of 2030 versus the 2019 baseline. If ČEZ does not hit this target, a 75bps premium is payable on redemption of the bond.

With order books exceeding €2.7 billion, the bond priced very competitively in challenging market conditions.

Nick Hayday, partner, Head of Banking and Financial Services UK and Global Co-Chair of Banking and Finance, said: “This is a fantastic bond issue for ČEZ following its recent redemption of a €750 million bond issued in 2010, with a pricing strategy highlighting investor demand for European investment grade corporates in the international debt capital markets. We were very pleased to have once again provided English and Czech law advice to the managers.”

Alongside Nick Hayday, Dentons’ Debt Capital Markets team comprised associate Ed Varney and trainee Maria Polycarpou in London, and partners Jiří Tomola and Ondřej Bartoň, counsel Lukáš Poulík and senior associate Martin Fiala in Prague.

Dentons has a well-established reputation for advising on green and ESG bonds. Notable other deals include advising: (i) mBank S.A. on its debut green bond; (ii) CPI Property Group on its debut sustainability-linked bond, tender offers for its outstanding green bonds and new issues of green bonds; (iii) the joint bookrunners on sustainability-linked bonds issued by ČEZ, a. s. under its EMTN programme; (iv) Standard Bank of South Africa on its debut green bond; (v) Commercial Bank of Dubai on its debut green bond; (vi) the underwriters on the Isle of Man Treasury’s debut sustainable bond; (vii) Globe Trade Centre on its debut green bond; and (viii) Ignitis on the first-ever international corporate green bond to be issued from central and eastern Europe.