Bonds & Loans: Bank of China sells ‘world’s first’ biodiversity bonds

A weekly overview of ESG developments for fixed income

Bank of China has issued what it claims are the world’s first biodiversity bonds. The bank raised Rmb1bn (€132m) from a 2.75% 2-year bond, and MOP1bn (€106m) from a 0.6% 2-year bond, with proceeds earmarked for projects including aquatic biodiversity conservation and forest reserve projects. Bank of China also issued a $300m tranche of broader green bonds with a coupon of 0.75% and a three-year tenor. Meanwhile, peer the Industrial and Commercial Bank of China raised Rmb10bn (€1.34bn) from a 2.8%, 3-year green bond to finance projects including clean energy and transportation.

In another possible first for the market, Saudi Arabia’s Public Investment Fund has said it will soon announce its first green bond – making it the first sovereign wealth fund to tap the market.

The Arab Petroleum Investment Corporation has published a green bond/sukuk framework, with Yahoo Finance reporting that a $750m 5-year issuance was due to take place yesterday. The energy-focused multilateral development bank recently released a separate ESG framework, and committed to allocate $1bn to green and sustainable energy over the next two years. Green assets currently comprise 13% of its portfolio. Eligible projects under the framework, which received a second-party opinion from VE, include climate mitigation and adaptation, the transition to a circular economy, pollution prevention and control and biodiversity preservation. 

The Icelandic Government has issued a framework to help it issue sustainable, green, social or blue bonds. The framework, which was given the highest ‘dark green’ rating by CICERO, sets out eligible green, blue and social investments, including renewables, clean vehicles and shipping vessels and access to education and healthcare. The country’s Minister of Finance, Bjarni Benediktsson, said that it had “long had [its] eye on opportunities for sustainable bond issues”, and that an important factor was that “the terms on such issues are becoming more and more favourable”. Meanwhile, Namibia’s Finance Minister has said that the country plans to issue green or sustainability bonds. Documents seen by national newspaper The Namibian say that the country will be ready to issue by Q4 2022.

Finnish telecommunications firm Elisa Oyj has signed a €130m syndicated sustainability-linked revolving credit facility. The five-year facility is linked to three targets: reduced emissions from purchased energy, improving the availability of high-speed mobile networks, and improved diversity among employees.

Brazilian agriculture firm COFCO International has signed a $700m sustainability-linked loan with a syndicate of banks. The 3-year loan is linked to the “traceability” of its supply chains and the environmental and social impacts of its soybean production.

Investors piled into Norddeutsche Landesbank’s debut green bond. The German bank raised €500m in five-year notes at 0.01%, after the order book hit €1.8bn.

Japanese shipping firm Kawasaki Kisen Kaisha has signed a ¥110bn (€846m) 'transition-linked loan’ with a syndicate of lenders including Kansai Mirai Bank and Saikyo Bank. The interest rate on the 5-year loan is linked to total annual emissions, emissions intensity, and achieving an A- or higher disclosures rating from CDP. Also in Japan, Gunma Bank has raised ¥10bn (€76m) from a 10-year sustainability bond which will be allocated to green and social projects including support for disaster recovery, clean transportation and green buildings.

Property firm CTP has raised €1bn from a dual-tranche green bond. The orderbook peaked at €3.5bn for the €500m 5-year and €500m 10-year tranches, which were fixed at 0.625% and 1.5% respectively. Two thirds of allocation went to asset managers, with 52% of the total to UK and Irish investors and “well over half” to green investors. Proceeds will be partially used to pre-fund CTP’s development pipeline for 2022.

Fraser’s Property has raised S$200m (€126m) from its second sustainability bond. The 7-year notes carry a coupon of 3%, and will finance or refinance investment in or development of buildings which have received a four star rating from GRESB.

Swedish aluminium engineering firm Gränges has raised SEK600m (€58.8m) from a sustainability-linked bond. The 5-year notes bear a coupon of 1.2% above the 3-month Stibor, linked to a 25% reduction in scope 1 and 2 emissions, a 30% reduction in scope 3 emissions and an increase in the share of recycled aluminium to 30% by 2025. 

UK social housing provider Southern Housing has launched a sustainable financing framework with a second-party opinion from S&P Global, which gave the proposed use of proceeds its second highest rating of “strong”. Eligible projects include improving energy performance of existing homes and building social housing. S&P has this week also issued second party opinions for Shanghai-based residential developer Jingrui Holdings and TMBThanachart, Thailand’s sixth largest bank.

JP Morgan allocated all the proceeds from its $1bn green bond to renewables lending, it has said. 11% of the proceeds went to residential solar and 89% to wind, representing 666MW of generation capacity. Examples of project allocation include the $120m financing of Enel’s Diamond Vista Wind farm in Kansas, and the $100m tax equity financing of a portfolio of residential solar panels.