The European Investment Bank (EIB) has purchased EUR 100 million of TenneT's hybrid bond to support the construction of the NordLink interconnector between Germany and Norway.
The financing follows EIB's last year agreements with TenneT for an EUR 350 million loan and with Norwegian transmission system operator (TSO) Statnett for an EUR 300 million loan for the 1.4GW high voltage direct current (HVDC) interconnector.
The transaction was backed under the European Fund for Strategic Investments (EFSI), launched by the EIB Group and the European Commission to boost the competitiveness of the European economy, and marks the bank's first participation in a market hybrid bond issuance.
According to EIB, the EUR 100 million hybrid securities will be consolidated and will form single series with TenneT’s hybrid securities program launched in March 2017.
Otto Jager, TenneT’s Chief Financial Officer, said: “In addition to the senior commitments of EUR 1.5bn, the EIB today supports one of the most challenging projects for the establishment of an interconnected renewable energy market in Europe. We are proud that we are the first issuer of a market hybrid bond with the EIB as participant and we are looking forward to further extend our relationship with the EIB in the near future.”
NordLink is a joint project between Statnett and Germany’s DC Nordseekabel GmbH, a 50:50 joint venture between TenneT and KfW.
The installation of the 623km long interconnector began last August with the first meters of cable laid on the seabed in Vollesfjord in Vest-Agder, Norway.
The EUR 2 billion project is scheduled for commissioning in 2019 and for commercial operation a year later.
“This interconnector is a major project in a world where renewable energy is of such importance. This last step completes the EIB support for this project, which is exactly the type of project the EIB was set up to do sixty years ago," said EIB Vice-President Ambroise Fayolle.
"The security of supply and effective use of renewable energy remain high on the agenda for EIB financing and we are glad that this aligns completely with the objectives of the EFSI. We are excited that we are able to support this project while participating in TenneT’s hybrid bond tap, alongside other investors.”