Dentons has advised a syndicate of banks including Bank of China, Deutsche Bank, Erste Group, HSBC, Raiffeisen Bank International and UniCredit as joint bookrunners on ČEZ’s €750 million sustainability-linked bond issue. The transaction represents ČEZ’s second sustainability-linked bond issuance, following its debut deal in April 2022, on which Dentons also acted as English law and Czech law counsel for the joint bookrunners. The €750 million 4.25% bonds are due in 2032 and will be listed on the main market of the Luxembourg Stock Exchange.
The ČEZ Group is one of the leading economic entities in the Czech Republic, operating in western and central Europe. The main object of its business is generation, distribution, trading and sale of electricity and heat; trading and sale of natural gas; provision of comprehensive energy services from the new energy sector; and coal mining. The use of proceeds of the bond issue is for general corporate purposes but ČEZ undertakes that proceeds will not be used for coal extraction and coal power expansion or maintenance. The key performance indicator for the bond is ČEZ reducing greenhouse gas intensity by 57.4% by the end of 2030 compared with 2019. If ČEZ does not hit its target, then the last coupon will step up by 75 bps.
The bonds were well received by the market, with order books exceeding €2.3 billion, enabling ČEZ to tighten pricing by 35 bps from initial guidance of 185 bps over mid-swaps.
Nick Hayday, partner and Head of Dentons’ Banking and Financial Services Division, said: “This is a really significant bond issue for ČEZ. This transaction demonstrates the continued market interest and support there is for the CEE region. We were pleased to have had the opportunity to provide legal support to the bank syndicate, combining our debt capital markets expertise with our experience in the energy sector and Prague office.”
Alongside Nick Hayday, Dentons’ Debt Capital Markets team comprised senior associate Brian O’Leary, associate Tom Breheny and trainee Miriam Babarinde in London, and partners Jiří Tomola and Petr Zákoucký 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 the underwriters on the Isle of Man Treasury debut sustainable bond; Standard Bank of South Africa on its first green bond; Globe Trade Centre on its first green bond; Ignitis on the first-ever international corporate green bond to be issued from Central and Eastern Europe; Commercial Bank of Dubai on its debut green bond issuance; the joint bookrunners on ČEZ’s debut sustainability-linked bond issuance; and CPI Property Group on its debut sustainability-linked bond issuance.
