London—Dentons has advised a syndicate of banks including Citi, Deutsche Bank, Erste Group and SMBC Nikko, as joint bookrunners, and Raiffeisen Bank International, as co-lead manager, on a debut sustainability-linked bond issue by ČEZ. The €600 million 2.375% bonds are due in 2027. This was the first ever euro sustainability-linked bond issuance by an investment-grade utility company in central and eastern Europe. Dentons acted as English law and Czech law counsel.

The ČEZ Group is one of the leading economic entities in the Czech Republic. It operates in western, central, and south-eastern Europe. The main object of the ČEZ business is generation, distribution, trading, and sale of electricity and heat; trading and sale of natural gas; provision of comprehensive energy services from the new energy sector; and coal mining.  The ČEZ Group is one of the ten largest energy companies in Europe, with more than 7 million customers and about 28,000 employees. The use of proceeds of the bond issue is general corporate purposes but ČEZ undertakes that proceeds will not be used for coal power generation projects. The key performance indicator for the bond is ČEZ reducing greenhouse gas intensity by 31% at the end of 2025 compared with 2019. If ČEZ does not hit its target then the coupon will step up by 75bp.

The bonds were well received by the market, with books exceeding €3.1 billion from over 200 individual orders. 

Nick Hayday, partner in Dentons' Capital Markets practice in London, who led on the transaction said, "This is a really significant bond issue for ČEZ. The situation in Ukraine has dampened CEE issuances of late, but this transaction demonstrates the continued market interest and support there is for the CEE region. We were pleased to have the opportunity to provide legal support to the bank syndicate, combining our debt capital markets expertise with our experience in the energy sector and Prague office."

Alongside Nick Hayday, the Dentons team consisted of senior associate Victoria Wyer, associate Niharika Khimji in London and partners Jiří Tomola and Petr Zákoucký and senior associates Jan Hrivnák and Ivo Hartmann in Prague.

Dentons has a well-established reputation for advising on green and ESG bonds. Notable other deals include advising the underwriters on the Isle of Man Treasury debut sustainable bond, Standard Bank of South Africa on its first green bond, Globe Trade Centre on its first green bond, Ignitis on the first-ever international corporate green bond to be issued from Central and Eastern Europe and, most recently, CPI Property Group on its debut sustainability-linked bond issuance.

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