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Green bond issue: Decoding with Jérôme Pelletan, CFO of Air Liquide

Published on June 28, 2024

4 minutes

Air Liquide has successfully issued its second green bond to finance flagship projects in the energy transition and sustainable development, particularly low-carbon hydrogen, CO2 capture and low-carbon air gases. With the Group now regularly issuing green bonds, Jérôme Pelletan, Chief Financial Officer and member of Air Liquide’s Executive Committee, explains this financial tool and its role in the Group’s development.

Air Liquide regularly issues bonds. What are they for?

To begin with, bonds are one of the three main financing tools used by Air Liquide to finance its long-term development. Capital increases are the most exceptional of these tools. We opted for a capital increase in 2016 to refinance part of the $13.4 billion acquisition of Airgas in the United States, the Group’s largest ever acquisition. However, this kind of operation is extremely rare; in this case, it was related to a historic opportunity for the Group.

Usually, the two main tools for financing Air Liquide’s long-term growth are bond issues or bank loans. In the second instance, the Group borrows directly from banks in the countries in which it operates. At Air Liquide, this form of financing remains fairly limited. Most of the Group’s long-term debt is raised on the financial markets, via bond issues. A bond is a part of this debt; it gives rise to annual interest payments and repayment of the principal at maturity. It is issued to a large number of institutional investors, such as fund managers, insurance companies and public and private banks. Bond issues allow us to diversify our sources of financing as much as possible, thereby limiting our risks.

What’s the difference between a green bond and a standard bond?

Issuing a green bond is concretely committing to use the borrowed sums to finance major projects that support the energy transition and sustainable development. As for the €500 million raised from our green bond issue in May, they will be used to finance projects in low-carbon hydrogen, CO2 capture and low-carbon air gases. To give investors a better understanding of the type of projects that Air Liquide plans to finance, the Group publishes a dedicated document (known as a “framework”) before the operation. This document sets out the details of the projects which will be financed by these green bonds and can be viewed on the Group’s website.

I want to emphasize that the green bond issue in May was a huge success, with demand far outstripping supply. We have benefited from very competitive financial conditions, which reflects investors’ confidence in Air Liquide’s ability to repay its debt and develop pioneering technologies and projects to contribute to the decarbonization of our activities, all while helping our customers to reduce their carbon footprint. This is the second green bond we’ve issued, after the first in 2021, proving our determination to become a regular issuer of green bonds to finance our numerous projects supporting the energy transition and sustainable development.

Isn’t borrowing to finance growth, whether from banks or investors, a risky strategy?

No, all major companies borrow on the financial markets to finance their expansion, particularly companies like ours, which develop projects that require major investment, from millions to hundreds of millions of euros. The key is to select investments with returns higher than the costs of our financial resources.

We also need to keep debt levels under control, ensuring that we have the capacity to repay it. And our Group does! Our balance sheet is particularly solid, with net debt at its lowest level since the acquisition of Airgas. As an example, our “gearing” (or debt-equity ratio), a key indicator that measures the Group’s net debt in relation to its equity, was just 37% at the end of 2023, compared to 90% after the Airgas acquisition and 57% just before. Our debt is highly diversified, both in terms of maturity and currency. Lastly, the Group has the means to repay this debt because it generates substantial cash flows, which we continuously improve. I would add that our largest investments, particularly in Large Industries, are underpinned by very long-term contracts, one of the cornerstones of Air Liquide’s strong business model.

This strength is widely recognized by the markets. This can be seen in our success in raising funds on the financial markets and also in the quality of the ratings we receive from the three specialized credit rating agencies: Standard & Poor’s, Moody’s and Scope Ratings. These agencies, which help investors to assess the benefits and/or risks of buying Air Liquide bonds, rate us as an issuer of Category A bonds, one of the highest ratings. This is proof that the financial markets trust our Group.


Find out more about sustainable finance at Air Liquide

Find out more about Air Liquide Sustainability commitments