Vestas Seizes on Positive Profit Momentum to Raise Bonds

2023-11-22 19:20

Vestas Wind Systems A/S is seeking to capitalize on an improving profit outlook to engage with investors and

Vestas Wind Systems A/S is seeking to capitalize on an improving profit outlook to engage with investors and sell new debt.

The Danish wind turbines maker is seeking to raise €500 million ($544 million) on Europe’s bond market only two weeks after boosting its earnings outlook for the year, according to a person familiar with the matter. The deal, maturing in 2031, is linked to the company’s sustainability targets, which includes a reduction of its greenhouse gas emissions.

Vestas provided a bright spot for the wind industry when it announced a big increase in new turbine orders earlier this month, which combined with strong pricing had a positive impact on its profit margins. The bond news also comes as the industry as a whole is seeking to turn the page after years of trouble where soaring input and borrowing costs and long-running supply-chain issues have derailed projects key for the energy transition.

Read more: Europe’s Battered Wind Sector Starts to Find Hope In Year of Crisis

Vestas new borrowing is being marketed at around 160 basis points over mid-swaps, the person familiar said. That’s more than double the spread seen on a shorter maturity deal in March. In March, it raised €500 million from an SLB maturing in 2026 that priced at 60 basis points over midswaps and a coupon of 4.125%.

A spokesperson for the company said they would provide comment when the deal was priced.

The company told investors during the bond marketing process that being late to the offshore wind industry had helped it avoid problematic contracts in Europe and the US, according to marketing documents seeing by Bloomberg. Offshore wind is crucial for countries to achieve net-zero due to the scale of the projects, that in the long run would allow energy costs to fall.

Meanwhile in the broader industry, and particularly in offshore wind, companies are struggling to finance large projects. Orsted A/S, the world’s largest developer of wind farms, said it was ceasing the development of some US projects as it announced a third-quarter net loss. Siemens Energy AG has been forced to seek government guarantees due to ballooning problems with faulty turbines at a Spanish venture.