(Bloomberg) -- Enel SpA is kicking off sales of top-rated debt aimed at fighting climate change, offering 2.75 billion euros ($3.11 billion) of bonds tied to emissions targets.  

The three tranches include provisions that would boost the Italian utility’s interest costs by 25 basis points if direct greenhouse gas output exceeds certain levels, according to a person familiar with the matter, who asked not to be identified because they’re not authorized to speak about it.

The Italian company has been a pioneer in the sustainability-linked bond market, which surged to almost $130 billion in 2021, data compiled by Bloomberg show. It sold the first such notes in the autumn of 2019 and has been replacing old, conventional debt with sustainability-linked bonds.

Enel takes the baton from junk-rated Dutch cable operator VodafoneZiggo Group Holding BV, which sold $2.4 billion of sustainability-linked notes last week. Enel’s deal is set to be the largest for a high-grade corporate SLB since ASTM SpA raised 3 billion euros ($3.4 billion) in three tranches in mid-November.

With interest-rate hikes looming in developed markets, it’s no surprise Enel is seizing on relatively low borrowing costs, Andrew Moulder, a senior analyst at CreditSights Inc, wrote in a note to clients on Monday.

Spreads on Enel’s 1 billion euro 2027 sustainability-linked bonds issued in October 2019 were at about 92 basis points on Monday. That’s more than 10 basis points wider than levels prevailing before last autumn’s volatility, but still below their average since issuance.

A spokesperson at Enel declined to provide further details on the latest sale as the deal is still ongoing. 

Some sustainability-linked bonds have been criticized for offering either easy climate targets or limited financial incentives to actually meet them. Enel’s first climate-related bond hurdle will be verified in the coming months -- the company predicts it will have met a 2021 target for building renewable energy capacity.

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