A Repsol logo at a petrol station in Bormujos near the Andalusian capital of Seville, southern Spain March 3, 2016. REUTERS/Marcelo del Pozo/File Photo

LONDON, June 29 (Reuters) - Spanish oil company Repsol (REP.MC) is set to raise 1.25 billion euros ($1.5 billion) from its debut sustainability-linked bond (SLB) sale, according to a message to investors seen by Reuters.

The company is planning to sell 650 million euros of eight-year bonds and 600 million euros of 12-year bonds as part of the sale, the message said. Demand was over 2.75 billion euros for the two tranches combined.

A Repsol spokesperson was not immediately available for comment.

SLBs allow firms to raise money for general corporate purposes while promising investors that if they do not meet the sustainability targets set, such as cutting carbon emissions, they will pay investors extra.

The deal comes after Repsol presented a new transition financing framework to investors that set forward a sustainability roadmap that is designed to meet its commitment to become a net zero emissions company by 2050. read more

Repsol became one of the first oil companies to issue a green bond back in 2017, but was criticised at the time for using that label to raise money which would be spent improving the efficiencies of its refineries.

The new SLBs come at a time when many companies in polluting sectors are issuing so-called "transition" bonds that are supposed to raise funds to help their shift to more sustainable operations.

The Repsol bonds are due to price later on Tuesday and the coupon will be linked to the company's targets to reduce its carbon intensity indicators by 12% by 2025 and 25% by 2030, the lead manager said.

The eight-year tranche will price at 50 basis points over the mid-swap rate and the 12-year at 70 bps over mid-swaps; this translates to a yield of about 0.48% and 0.94% respectively, by Reuters calculations.

BBVA, HSBC and Natixis are the global coordinators, with the latter two also serving as sustainability structuring advisers.

Source: Reuters

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