Another large concern whose main business relates to oil shale, namely Viru Keemia Grupp (VKG), finds the news of Eesti Energia's loan as an encouraging sign for them, too. 

The company's CEO, Jaanis Sepp, told ERR that: "We have not been able ourselves to attract financing from foreign banks to finance our shale oil production. That said, it now seems that if we say enough of the right things on our side, there are still some options out there."

Eesti Energia's stock exchange announcement on the major loan said this was related to two environmental, social and corporate governance key performance indicators, namely reducing both mandatory and voluntary CO2 emissions, and boosting renewable energy production capacity. 

In other words, even as the company plans to use the loan money mainly refinance bonds due to expire in September this year, Eesti Energia was able to reduce its environmental footprint, via the new loan agreement.

The €600-million loan was granted in cooperation with international banks, headed by Deutsche Bank. Among those banks involved which operate in Estonia, Luminor, LHV and Citadele also took part in the syndicated loan.

LHV told ERR that the loan might not have been viable at all, had Eesti Energia's not pledged to curb polluting emmissions,

LHV Pank's corporate banking manager, Indrek Nuume, said: "Banks must be based on meeting climate goals and increasing the share of renewable energy in the same manner."

"What could have proven hard is that, today Eesti Energia has a large share of energy production from shale oil, and this has undoubtedly led to a situation where many creditors canceled loans," he went on.

A separate issue is the extent to which other factors influenced Eesti Energia's getting a loan - especially the rise in interest rates, and the war in Ukraine. Both VKG and LHV say that financing has become more complicated as a result of both developments.

Nunne at LHV said: "Over the last six months, the money markets, and the interest rates on those money markets in our entire region, have changed significantly. One of the reasons is the Russia-Ukraine war. We, Estonia, are still seen as being a frontline country, and the second factor is the actual rise of interest rates, which have caused a significant rise in bond prices," said Nuume. .

"The markets still don't work when it comes to additional financing for the larger demands in our region. This is still very difficult. Here , big financiers such as the European Bank for Reconstruction and Development (EBRD), (Nordic Investment Bank) NIB, and the European Investment Bank (EIB), tend to deliver on this market. These usual market participants, however, are all involved in a wait-and-see attitude. It is still hard to find financing for large projects, when these amounts are over €300 million," Nuume continued.

International financial groups are mainly waiting for two things - the fall of the rate of inflation, which in Estonia has been the highest in the eurozone in several recent months, and the end of the war.

"They want to see if and how inflation will be brought under control and what will be the price of finally bringing it under control, that is, what has happened to the economic growth of these countries," Nuume said.

At the same time, Nuume added that the small share of Estonia's overall foreign loan component could have made it somewhat easier to get the loan. "However, I think that it was in general quite difficult to amass an amount of this magnitude. But again, this is quite a normal feature for the manager of a syndicate, whereby, in the end ,you find out at the 11th hour whether you will get the money, or not."

Another indication that Eesti Energia may have had a more difficult time getting a loan than usual is the fact that bonds with a maturity date of September being refinanced with a loan is not a preferred option for companies. Instead, letting the long-term loans become short-term on the balance sheet and knocking different ratios out of place seems to be the order of the day. Under normal circumstances, companies prefer to keep long-term loans as just that, long-term.

Eesti Energia declined to comment on the loan's interest rate.

LHV also did not want to state this, saying merely that the interest rates have risen for both companies and nation states. "There has been a price for getting money, and the economic depression has also created the risk that an investor might want to get a higher return, compared with the previous period," Nuume said.

VKG said that although they have not applied for a loan for a long time, the interest rate could easily be six percent in their case.

"The last time, we had a loan margin of three percent, plus the base interest rate, which today is already three percent. It is already six months we have been at this interest rate level. For one reason and another, I tend to think that the interest rate [for Eesti Energia] was higher, but I don't know for sure. I can't really speculate," VKG CFO Sepp added.

Eesti Energia is set to publish the unaudited financial results of the past year in less than two weeks' time, on February 28, and ahead of that says it does not want to comment further.

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