Teollisuuden Voima Oyj’s debut EU green bond — the first from the nuclear sector to be sold under the European Green Bond Standard — saw more than three and a half times investor orders for the €500 million deal.
The Finnish power producer drew over €1.75 billion ($2.06 billion) of orders for the note, which is expected to mature in March 2033. Pricing tightened to 125 basis points over mid-swaps, down from the initial 160 basis points, according to a person familiar with the matter.
TVO’s sale marks a milestone for Europe’s green debt market, marrying the introduction of the European Green Bond Standard and the inclusion of nuclear power. EU lawmakers classified nuclear as a green activity in 2022, a decision that divided investors.
Sustainable investors appear increasingly open to funding nuclear energy projects, highlighting its role in cutting carbon emissions. Still, critics point to concerns over waste, safety and reputational risks. The General Court of the EU, the bloc’s second-highest tribunal, is due to deliver a ruling this week on a legal challenge against the European Commission’s decision to label some fossil gas-fired and nuclear projects as “green” under its taxonomy.
The sentiment around nuclear energy in Europe has shifted in recent years. It now has greater political backing, bolstered by concerns around energy security and its role in cutting carbon emissions.
The proceeds of TVO’s sale will go toward a concurrent tender offer, with an equivalent amount earmarked for nuclear projects defined as eligible under the EU Taxonomy — specifically climate change mitigation activities, the person said.
The notes are expected to be rated Baa3 by Moody’s Investors Service and BBB- by Fitch Ratings. Danske Bank A/S, NatWest Markets Plc, OP Bank and SEB AB arranged the sale.
The EU standard came into force late last year. It is voluntary, but necessary if borrowers want to call their debt a European green bond. The bloc’s rules require at least 85% of proceeds to be aligned with the EU’s green taxonomy, subject to strict “do no significant harm” safeguards. Italy’s A2A SpA was the first borrower to issue under the standard in January, but TVO will be the first to test investor appetite for nuclear debt in this nascent corner of the market.
TVO operates Finland’s Olkiluoto plant, one of the largest nuclear facilities in Europe. It has long argued that atomic power is central to the country’s decarbonization strategy.
Issuer Profile
Debt distribution: TVOY FH Equity DDIS
Capital structure: TVOY FH Equity CAST
Related securities: TVOY FH Equity RELS
Ratings history: TVOY FH Equity CRPR
Source: Bloomberg