Placed with more than 300 investors, having received offers for close to €4.5 billion

IBERDROLA ISSUES €1.5 BILLION IN BONDS OVER 5 YEARS

The issue meets the Company’s objectives of maximizing financial strength, covering its financing needs until the end of 2010

IBERDROLA today placed a €1.5 billion five-year bond issue in the euromarkets, the proceeds from which will be assigned to anticipating financing requirements up until the end of 2010.

The issue, three times over-subscribed with orders totalling €4.5 billion, was placed with more than 300 investors. Its success highlights a strong market interest in IBERDROLA paper and the Company’s ability to raise funds in different markets. This is reflected in the positive trend of CDS (credit default swap) differentials for the Company which are now below 100 basis points.

The issue was priced to yield a spread of 220 basis points, substantially improving on terms obtained by companies with a similar rating for euromarket operations with the same tenor. Lead managers were Banco Santander, Barclays Capital, Calyon y Bank of America/Merrill Lynch, with co-lead managers Caja Madrid and ank of Tokyo-Mitsubishi.

The funds will strengthen the Company’s already solid financial situation and will increase liquidity to over €9.0 billion, sufficient to eet its financing needs for the next two years.

The placement is in addition to other bond issues by IBERDROLA in the past three months through which it has raised a total of  close to €5 billion, and to the recent extension of a loan signed in November 2006 to part finance the acquisition of ScottishPower. As a result of these operations, IBERDROLA has lengthened the verage life of its debt to more than six years.

DISCLAIMER

This communication does not constitute an offer to purchase, sell, or exchange, or the solicitation of an offer to purchase, sell, or exchange, any securities. The shares of Iberdrola, S.A. may not be offered or sold in the United States of America except pursuant to an effective registration statement under the Securities Act or pursuant to a valid exemption from registration.