14 June 2016

US power company issues second benchmark-sized green bond

Southern Power has returned to the green bond market with its second benchmark issue, this time denominated in euros.

The electricity generator, a subsidiary of Southern Company, has issued a €1.1 billion ($1.2 billion) bond in two tranches to finance wind and solar plants in the US. A €600 million tranche, maturing in 2022, will pay a coupon of 1.00% and was priced at 105 basis points over mid-swaps. The remaining €500 million tranche, maturing in 2026, pays a coupon of 1.85% and was priced at 140 basis points over mid-swaps.

Barclays, BNP Paribas, Bank of America Merrill Lynch and UBS were the underwriters on the deal. Settlement is expected on 20 June.


Southern Power's first green bond, issued in November, was initially planned for $750 million but was upsized to $1 billion in response to strong investor demand. It was issued in two tranches of two and 10 year maturities.

Last year's bond did not have a second-party opinion on its green credentials, but Deloitte will audit the use of proceeds annually to assure they are directed at green projects. At this stage, it is not clear whether the new issue will have a second party opinion.

Southern Power has some 523MW of operational renewable energy assets and a further 1.2GW under construction.

Southern Company is a major coal-burning utility but another subsidiary – Georgia Power – also issued a green bond in March this year.