Bonds and Loans: Canada to raise C$5bn in green govvies

A weekly overview of ESG developments for fixed income

The Canadian government has announced plans for its first green bond issuance later this year. The government will aim to raise C$5bn (€3.3bn), which will represent around 2% of its bond issuance in the current fiscal year.

Green bond issuance in emerging markets will reach $100bn by 2023, according to a report by Amundi and IFC. The 2020 emerging markets green bond report found 175 green bonds issued in emerging markets, with first-time issuances in seven emerging markets including Egypt and Kazakhstan. Of the $40bn raised from issuances, $18bn was in China, with large issuances in Chile, Brazil and Indonesia.

Social bond issuance in Q1 2021 was nearly 10 times the volume of Q1 2020, according to a report by Refinitiv, with $91.8bn raised. BNP Paribas took the top spot for underwriting, with 6.8% of market share, followed by JP Morgan and Credit Citi. The top 10 underwriters had a total market share of 50.2%.

The International Development Association has issued €1.75bn in sustainable development bonds. The 15-year bonds, which have a coupon of 0.35%, were mostly issued to European investors with some Asian allocation. Proceeds will support sustainable development activities in IDA member states, including Covid relief.

American Homes 4 Rent has closed a $1.25bn sustainability-linked revolving credit facility. The 4-year facility, which has two six-month extension options, replaces the company’s pre-existing $800m revolving credit facility.

Spanish electricity company Endesa has signed a 7-year, €150m, green loan with Caixabank. The loan is subject to an interest rate reduction if Endesa achieves an 18% cut in CO2 emissions by 2023, and brings the proportion of Endesa’s debt which is subject to sustainability objectives to 45%.

The German government has published the first allocation report for its green bonds issued in 2020. Germany raised €11.5bn from two issuances in September and November. 58% of the proceeds are earmarked for transport development, particularly Germany’s high-speed rail network, while a further 24% was spent on green projects in developing countries. Green energy and industry; research; and agriculture, forestry and biodiversity received 10%, 5% and 3% of the proceeds, respectively. 

Hannon Armstrong has announced a $400m sustainability-linked revolving credit facility. The firm will be entitled to an interest rate reduction if it achieves certain levels on its CarbonCount metric, measured quarterly.

International developer Frasers Property Group has secured an A$300m (€193m) sustainability-linked loan, including A$75m in funding from the Australian government. The loan, which will be used to install solar projects at two sites in Australia, has an interest cost reduction from the second year of the loan, linked to the group maintaining its four-star rating in each of its global real estate sustainability benchmarks. 

Industrial thread company Coats has signed a $360m sustainability-linked loan. The three-year facility is tied to reductions in energy intensity, as well as employee engagement as part of a good workplace certification scheme and the transition to recycled raw materials.

Tatra Bank has become the first Slovakian bank to issue green bonds, raising €300m to finance green projects across Slovakia and the EU including green buildings and sustainable agriculture. The 7-year bond was twice oversubscribed and has a coupon of 0.8%.

UK housing association Clarion has signed a £100m sustainability-linked loan with NatWest. The interest rate on the loan is linked to two KPIs – how far Clarion is able to improve the economic, environmental and social wellbeing of communities it houses, and the number of apprentices hired by the group.

Food company General Mills has signed a 5-year $2.7bn sustainability-linked revolving credit facility. The pricing adjustment is based on renewables usage and reduction in GHG emissions.