Drax Group Plc's (LSE:DRX) subsidiary Drax Finco priced a €1bn offering of senior secured notes on Thursday, locking in a 5.875% coupon on debt maturing in five and a half years.
The London-listed power generator and biomass pellet producer will use the proceeds chiefly to repay in full the remaining debt outstanding under its Bridge Facility Agreement, entered into on 1 June, with the balance covering fees, expenses and general corporate purposes, including repayment of other existing group indebtedness.
Drax drew £0.8bn under that bridge facility to help fund its £561m acquisition of Bluefield Solar Income Fund, which completed on 31 July and added around 0.9GW of operational solar and wind capacity alongside a 2.9GW development pipeline, lifting total capacity under management to approximately 6.1GW.
The notes were issued at 100% of nominal value and will extend the Group's average debt maturity profile.
Because the proceeds will principally refinance existing borrowing rather than add new debt, Drax said the transaction is expected to be neutral to the Group's leverage.
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That framing matters given Drax had flagged net debt to adjusted EBITDA running above its long-term target of around 2.0 times in 2026, with deleveraging to that level targeted by the end of 2027.
The refinancing lands weeks after Drax said full-year 2026 adjusted EBITDA is expected to land around the top of analyst consensus, which stood at £698m as of 4 September, and ahead of the Capital Markets Day the company has scheduled for 23 November to set out its growth plans.