Sustainability-Linked Bonds

Axpo misses its SLB targets

Written by Josephine Richardson

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Axpo Holdings, a Swiss energy producer, has missed the renewable energy targets linked to three of its Sustainability-Linked Bonds (SLBs), triggering coupon step-ups. The changed value of expected cashflows from these instruments was immediately factored in by Bloomberg, leading to a fast repricing.

However, while market prices have adjusted, they do not yet appear to capture the full value of the step-ups. This suggests potential for further market correction and highlights the need for investors to factor in the nuances of SLB structures when assessing risk and return.

Axpo’s case shows how the ambition level of an SLB target can influence whether it’s achieved. The company set a goal to add 1,500 MW of renewable capacity by 2024 but fell short by around 34%. According to Axpo, a mix of obstacles — including slow approval processes and geopolitical instability — hindered progress toward the target.

About the author

Josephine Richardson

Josephine Richardson

Managing Director, Head of Research

Based in London, Jo leads AFII’s research and a global team supporting fixed income investors as they align their portfolios with climate and sustainability goals. She joined AFII after 18 years in fixed income markets at JPMorgan.

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