EBRD invests in Lithuanian grid’s debut sustainability-linked bond

By Vanora Bennett

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  • EBRD invests €22.5 million to anchor €75 million issuance by EPSO-G
  • EPSO-G is the first ever Baltic company to issue sustainability-linked bond
  • By diversifying EPSO-G funding, bond supports Lithuania’s grid integration with the EU electricity network

Acting as an anchor investor, the European Bank for Reconstruction and Development (EBRD) has backed the issuance of a €75 million sustainability-linked bond by Lithuania’s state-owned energy transmission system and exchange group EPSO-G. The EBRD is investing €22.5 million in the first such bond issued by a Baltic company, which will help Lithuania diversify its energy supplies.

Lithuania is a net electricity importer, relying heavily on interconnection with neighboring countries to meet its energy needs. It currently forms part of the BRELL electricity ring, which includes the three Baltic countries, Russia and Belarus, but is targeting to fully synchronise its electricity grid with the EU network by no later than 2025.

The sustainability-linked bond will be listed on the Nasdaq Baltic exchange, a European Union-regulated platform and part of the Sustainable Stock Exchanges Initiative, which aims to enhance corporate transparency on environmental, social and corporate governance (ESG) issues.

Grzegorz Zielinski, EBRD Director, Head of Energy Europe, said: “the EBRD is proud to contribute to the successful placement of the EPSO-G bond in this volatile and challenging market environment. EPSO-G’s debut sustainability-linked bond is consistent with Lithuania’s climate commitments and energy security ambitions by facilitating the integration of Lithuania’s electricity grid with the EU network. It therefore represents a top priority for the EBRD.”

Algirdas Juozaponis, acting CEO of EPSO-G said: “The issuance of sustainability-linked bonds will have direct impact strengthening Lithuanian energy independence and will make a significant contribution to achieving sustainability objectives: to reduce carbon footprint, ensure the stability of the transmission grid and foster a transition toward climate-neutral energy”.

 As well as becoming the first Baltic company to issue a sustainability-linked bond, it is also the first time that EPSO-G has approached the capital market to raise funds.

The successful placement of its €75 million issue will allow EPSO-G both to diversify its funding base and to continue investments in electricity grid synchronisation with continental Europe, partly funded by the European Union, to ensure greater security of supply. In addition, the planned completion of 200 MW of energy storage facilities will ensure the stability and reliability of Lithuania’s electricity system in the event of disturbances.

In preparation for the issue, EPSO-G established a sustainability-linked bond framework in line with the International Capital Markets Association Sustainability-Linked Bond Principles, further reviewed by CICERO.

Energy security and efficiency are among the EBRD’s top priorities in Lithuania. To date, the Bank has invested about €1.15 billion to support 111 projects in in all sectors of the Lithuanian economy.

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