Terna S.p.A. has successfully completed a landmark operation in the European sustainable finance market with the launch of a perpetual, subordinated, hybrid, non-convertible, fixed-rate European Green Bond for a total nominal amount of €850 million. The transaction represents the first perpetual hybrid bond issued in full compliance with the Green Bond Standard, in line with the requirements of EU Regulation 2023/2631 on so-called “green bonds”, both for Terna and for the Italian market as a whole.
The issuance, led by the company headed by Giuseppina Di Foggia, follows Terna’s inaugural €750 million senior European Green Bond placed in July 2025. Market reception was exceptionally strong, with demand exceeding €7 billion, approximately nine times the offered amount. This oversubscription reflects not only the appetite for green-labelled instruments, but also the confidence of institutional investors in Terna’s credit profile and long-term industrial strategy. The order book was characterized by high-quality investors and broad geographical diversification, reinforcing Terna’s positioning among leading European issuers in sustainable debt markets.
Financial structure and market signals
The bond was issued in a single tranche and combines several distinctive features: it is green, hybrid, perpetual, subordinated and non-convertible. It is non-callable for six years and was priced at par, with a spread of 123 basis points over the Midswap rate. This implies a subordination premium of less than 60 basis points compared to a senior bond of equivalent duration, the lowest ever recorded for a euro-denominated corporate hybrid bond in Europe. Such pricing highlights both the strong investor demand and the market’s assessment of Terna’s creditworthiness.
The annual fixed coupon is set at 3.875%, corresponding to the effective rate of the transaction, and will be paid until the first reset date on 2 February 2032. From that point onward, if the bond is not called, the coupon will be reset at the five-year Euro Mid-Swap rate plus an initial margin of 123 basis points. This margin will increase by an additional 25 basis points from 2 February 2037 and by a further 75 basis points from 2 February 2052, reflecting the long-dated and perpetual nature of the instrument. Settlement is scheduled for 2 February 2026. Rating agencies are expected to assign a rating of “Baa3” by Moody’s and “BBB” by Standard & Poor’s, with an equity content of 50%, supporting the strengthening of the Group’s capital structure.
Alignment with EU taxonomy and industrial strategy
The bond issuance is fully embedded in the financial strategy outlined in Terna’s 2024–2028 Industrial Plan, updated in March 2025. It contributes to capital structure optimisation while further diversifying the company’s investor base. In accordance with EU Regulation 2023/2631, the net proceeds will be used to finance or refinance “eligible green projects” identified under Terna’s Green Bond Framework, drawn up in July 2025. The framework is aligned with the "Green Bond Principles 2025" published by the International Capital Market Association and with the EU Taxonomy for sustainable activities.
The allocation of proceeds is detailed in the Factsheet relating to the issuance, reviewed and assessed by Moody’s Ratings and published together with the pre-issuance review in the Green Bonds section of Terna’s website, without resorting to the flexibility pocket allowed by the regulation. All selected projects will be 100% aligned with the EU Taxonomy and are central to the implementation of Terna’s Industrial Plan, particularly in supporting the resilience, efficiency and decarbonisation of electricity transmission infrastructure.
The bond was issued under Terna’s €4 billion Euro Medium Term Notes Programme, approved by CONSOB in June 2025 and updated in January 2026, and an application will be made for listing on the Mercato Obbligazionario Telematico managed by Borsa Italiana. The placement was supported by a broad international banking syndicate, underscoring the strategic relevance of the transaction. Overall, the deal sets a new benchmark for hybrid green instruments in Europe, combining regulatory compliance, financial innovation and long-term sustainability objectives.
This content is produced thanks to the support of sponsors
Cover: Envato image