A2A misses SLB target, triggers 25bps coupon step-up
The company’s AGM documents show that renewable energy capacity addition fell short
In January 2025, A2A became the first European corporate to issue a green bond compliant with the EU's new green bond standard. “This issuance confirms A2A’s position as reference institution in the development of sustainable finance instruments”, proclaimed the
Italian utility’s chief financial officer Luca Moroni at the time.
Moroni’s reference institution is a frequent issuer of sustainable debt and convened its AGM on April 29. Within the documents up for discussion, the company confirmed that it missed a renewable energy target associated with an SLB issued in 2022.
Missed target
The revelation was made in A2A’s report on operations. The 2022 SLB issued by the company had a sustainability performance target (SPT) linked to installed renewable energy capacity. The target for which was set at 3 GW. The company’s existing capacity at last count stood at 2.6 GW.
The missed target has triggered a 25bps step up in the bond’s coupon rate.
The Anthropocene Fixed Income Institute (AFII) has published research analysing the impact of the step up.
“In previous cases where SLB targets have been missed, there have been sudden market re-pricing once the miss is confirmed or after Bloomberg adjusts the bond structure”, writes AFII’s head of research Josephine Richardson.
There were early signs of A2A missing the target, notes Richardson. AFII research highlights A2A’s strategy updates in early 2024 which were on track to undershoot the renewable energy target of the bond in question.
In light of these changes, Richardson warns, “the probability of the target being missed was near certain”.
Pricing it in
A2A’s missed target also offers insights into how markets price in such events. The pricing in of missed targets and the imposition of costs on the company is arguably linked to the credibility of SLB targets and their ambition.
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In 2023 another Italian energy company – Enel - also missed its SLB target. At the time, AFII research shows that markets moved quickly and price shifts reflected Enel’s coupon rate increase for ten SLBs.
For A2A, there was some uncertainty over the timing of the step-up.
According to A2A, it will come into effect from the first interest rate period following the publication of its sustainability statement. AFII analysis notes that the report’s auditor statement was dated 31 March 2025, and the annual coupon is paid on 16 March – implying that the higher coupon will only accrue by that date next year.
The timing issue seemingly affects how and when the SLB market prices in the consequence of a missed SLB target.
As the SLB market matures and attracts corporates and investors alike, its awareness and efficiency is evolving too.
“In this atmosphere of increased awareness, A2A’s target miss was partially predicted by the market and effectively digested on confirmation”, Richardson concludes.
