BNP Paribas set to issue innovative €500m equity-linked energy transition bond

(Amends to correct spelling of Tera Neva)

BNP Paribas, the French investment bank, is to issue a novel €500m equity-linked bond whose proceeds will be invested into equity in companies that are part of the energy transition away from heavy C02 emitting companies.

RI understands that the bond, named Tera Neva, will be announced later this month and is backed by the Climate Awareness Bonds (CABs), or green bonds, of the European Investment Bank (EIB) for credit purposes. The proceeds of the bond, however, will be invested into an equity index, the Ethical Europe Climate Care Index, developed jointly by Vigeo, the French ESG research company, and Solactive, the German company that specialises in tailor-made index development and calculation.BNP Paribas has been active in selling tracker certificates based on the index. The index whittles down the Eurostoxx 600 index to 30 names following a best-in-class ESG strategy and a focus on carbon data and the respective companies’ clean energy transition strategy. The index methodology can be seen here.

RI understands that the bond has already secured investment from a number of institutional investors including pension funds and insurance companies. BNP Paribas declined to comment.

The EIB, one of the pioneers of green bonds has issued some €10.5bn in paper to date to finance environmental investment programmes.