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A&O Shearman advises on Terna’s first hybrid European Green Bond

A&O Shearman advises on Terna’s first hybrid European Green Bond
Terna S.p.A. has completed the placement of a perpetual, subordinated, hybrid, non-convertible European Green Bond issue with a nominal value of EUR850 million, intended for institutional investors. 

This transaction represents, for Terna and for the domestic market as a whole, the first perpetual hybrid bond issuance in Green Bond Standard format (i.e., in line with the requirements of EU Regulation 2023/2631 on so-called “green bonds”).

A&O Shearman advised the financial institutions acting as joint  Lead managers in the transaction.

In accordance with EU Regulation 2023/2631, it is expected that the net proceeds from the issue will be used to finance or refinance the Company’s “eligible green projects”, identified or to be identified based on Terna's Green Bond Framework, drawn up in July 2025 and aligned to the "Green Bond Principles 2025", published by the International Capital Market Association (ICMA), and to the EU Taxonomy, aimed at facilitating sustainable investments.

The issue is structured as a single tranche bond and will pay a fixed annual coupon of 3.875% until the first reset date (February 2, 2032). From this date, should the bond have not been called, the hybrid bond will pay annual interests equal to the five-year Euro Mid-Swap rate plus an initial spread of 123 basis points. This will be increased by a further spread of 25 basis points from February 2, 2037 and an additional increase of 75 basis points from February 2, 2052.

The bond is documented under Terna’s EUR4 billion Euro Medium Term Notes (EMTN) program, approved in June 2025 by CONSOB and admitted to listing on the MOT—Mercato Obbligazionario Telematico—managed by the Italian Stock Exchange (Borsa Italiana).

The A&O Shearman team was led by partners Alessandra Pala and Cristiano Tommasi, supported by associate Marco Mazzurco and trainee Antonio Iuliano. Counsel Elia Ferdinando Clarizia advised on tax-related matters.

“This issuance represents an important step for Italy's sustainable finance market.”

Alessandra Pala, partner, commented: “This issuance represents an important step for Italy's sustainable finance market. In a global context where investors favor transparent instruments aligned with European regulation, Terna's transaction—the first bond issuance in Italy to combine a hybrid structure with full compliance with EU Regulation 2023/2631—sets a new benchmark for the sector and confirms the ability of Italian issuers to position themselves at the forefront of this segment.”.

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