Pirelli has successfully completed the issuance of a 5-year sustainability-linked bond for a total of 600 million euros, intended for international institutional investors. The news was communicated by the company itself. The issue attracted the interest of over 210 international investors, generating demand that exceeded supply by more than 4.6 times, reaching approximately 2.8 billion euros.
The details of the bond
This bond linked to sustainability reflects Pirelli’s objectives related to the company’s fight against climate change, which have been validated by the Science Based Targets initiative thus ensuring that the company’s objectives are scientifically sound. Furthermore, the bond is consistent with Pirelli’s “Sustainability-linked Financing Framework”, a strategic document updated in May 2024 that clearly establishes the company’s commitments towards sustainable finance.
The issue, Pirelli further specified, which took place within the current Euro Medium Term Note Programme, allows for the optimization of the debt structure, extending its maturities and diversifying its sources.
The main characteristics of the bond include a total amount of 600 million euros, with the settlement date set for 2 July 2024 and the expiration scheduled for July 2, 2029. The bond offers a coupon rate of 3.875%, which represents an attractive return for investors, and at a price of 99.666% of the nominal value. Additionally, the redemption price is 100%, ensuring that investors receive the full value of their investment upon maturity.
The yield effective at maturity is estimated at 3.950%, which represents a spread of 115 basis points above the mid-swap reference rate. This makes the bond an attractive option for investors looking for yields above standard market rates. The securities will be listed on the Luxembourg Stock Exchange, a fact which further underlines the international interest and success of the operation in global financial markets.
But the stock continues to fail to shine on the stock market
The good news relating to the issuance of the sustainable bond is partly overshadowed by the recent lackluster performance of the Pirelli group on the stock market. Although today the decline is limited to 0.18%, in the previous days the percentage change was much more negative, bringing the overall monthly change to a significant -8.23%.
This sharp decline was triggered by the exit of the Chinese Silk Road from Pirelli’s share capital, which took place at the beginning of June. The massive sale had a notable impact on the stock, which recorded a loss immediate del 5%. According to what was communicated by the company, the Silk Road fund, which also held a significant stake in Autostrade per l’Italia, sold over 90 million Pirelli shares, equivalent to approximately 9% of the total capital. The Chinese fund’s move destabilized the market, contributing to an atmosphere of uncertainty among investors. This, combined with global market fluctuations and the specific dynamics of the tire sector, has accentuated the volatility of the stock.
