The EU has raised €6 billion from its second green bond under the NextGenerationEU programme. Orders for the 20-year deal, which is the largest green bond so far this year, reached €78 billion, leading the bond to price with a yield of 1.374 percent, equivalent to 74.5bps over the reference Bund. Benelux and UK investors took the largest share of allocation, with 17 percent each, followed by France at 16 percent and Germany and Nordics at 12 percent. Fund managers took 35 percent, followed by insurers and pension funds and bank treasuries.
Sustainable bond issuance in the first quarter was less than half that of the equivalent period in 2021, according to a new report from the International Capital Markets Association (ICMA). Issuance reached $87 billion by 18 March, against $171 billion for the same period in 2021, with the absence of covid-related government and EU borrowing placing a significant dent in totals. ICMA said its principles remained the global standard, with 98 percent of issuance by volume aligning with the green, social, sustainable or sustainability-linked bond principles.
EQT has raised €1.5 billion from a second sustainability-linked bond. The proceeds from the dual-tranche deal, comprising a six-year note paying a 2.375 percent coupon and a 10-year note paying 2.875 percent, will be used to part-fund EQT’s acquisition of Baring Private Equity Asia. The coupon on the six-year tranche will rise by 25 basis points, while the coupon on the 10-year tranche will increase by 20 bps if the investor fails to meet its target for 40 percent of portfolio companies to set SBTi-approved targets by 2025. Orders for the deal reached €3.5 billion.
French healthcare firm Sanofi raised €650 million from its inaugural sustainability-linked bond as part of a €1.5 billion offering. The notes, due 2029, pay a coupon of 1.25 percent, which is linked to the provision of medicine to 1.5 million patients with non-communicable diseases in the world’s 40 poorest countries by 2026. If the target is missed, the coupon will step up by 25bps.
Fellow French firm Pernod Ricard has raised €750 million from an inaugural sustainability-linked bond. The drinks producer described a “very positive” reception from investors for the 7-year bond, with orders reaching €4.1 billion. Payments are linked to two targets/KPIs: a reduction in scope 1 and 2 emissions and reduced water consumption at its distilleries. The 1.375 percent coupon will step up by 25bps from 2025 if the firm fails to hit both targets.
Enel has returned to the SLB market, raising £750 million from a £2 billion order book. One lead manager said the deal saw “aggressive tightening”, allowing the Italian borrower to knock 20bps off initial price thoughts. The bond pays a coupon of 2.875 percent, which will increase by 25bps per year if Enel fails to reach its scope 1 reduction target for 2024. UK and Irish investors took 83 percent of allocations, with fund managers accounting for 78 percent.
German development bank KfW raised €16.2 billion from 37 green bond transactions last year, according to its latest allocation report. Renewable energy took 15 percent of proceeds, with energy efficiency taking the remaining 85 percent. All proceeds were invested in OECD countries, with 95 percent going to Germany companies. A full impact report will be released in the first half of 2022, but the bank estimates that its green bond issuances in 2021 contributed to the prevention of 1.77 million tonnes of GHG emissions.
Ecuador’s Banco Pichincha has privately placed a $100 million social gender bond – the country’s first – with the IFC and the Inter-American Development Bank. The two institutions contributed $50 million each to the five-year bond, the proceeds of which will be used to finance 10,000 small to medium enterprises owned or led by women in Ecuador. The bond pays a coupon of LIBOR plus 4.3 percent. The bond also includes a performance component linked to targets relating to the bank’s women-owned SME portfolio, which is independent of the coupon.
The UK plans to auction an 11-year green gilt on 10 May, its debt management office has said. The size of the issue will be announced early next month, and it will pay a coupon of 0.875 percent.
Industrial services company Trimble has signed a $1.25 billion revolving credit facility with a syndicate of banks including Bank of America, Goldman Sachs and Sumitomo Mitsui. The firm will see the interest rate adjusted by up to 5bps based on its achievement of emissions reduction and gender diversity targets.
The London School of Economics has privately placed a £175 million sustainable bond with a group of UK and US investors. The university will allocate part of the proceeds to the construction of a new ‘net-zero carbon’ building, and said that the bond, which has maturities ranging from 35 to 50 years, was 4.5x oversubscribed.
BlackRock has upsized its sustainability-linked revolving credit facility by $300 million to $4.7 billion. The interest rate on the facility, signed with a large group of banks, is linked to targets for women in senior leadership positions and the proportion of Black and Latino employees.
Indian energy firm Greenko Wind has raised $750 million from a green bond to part-fund a pumped storage facility in Andhra Pradesh. The three-year bonds priced with a coupon of 5.5 percent.
First Abu Dhabi Bank has raised €500 million from its first euro-denominated green bond. The bank saw orders of €685 million for the 5-year note, including €50 million of joint lead manager interest. The UK’s Yorkshire Building Society has also raised £300 million from a social bond which was 7x oversubscribed.
Canada’s Dream Industrial Real Estate Investment Trust is looking to privately place a C$200 million ($160 million; €147 million) green bond paying a coupon of 3.968 percent with Canadian investors via TD Securities, Scotia Capital, RBC Dominion Securities and CIBC. The REIT has already allocated C$500 million of the proceeds of its previous two green bonds to purchase energy efficient buildings and add renewable power and energy efficiency upgrades to its existing properties.
Singapore’s First REIT has raised S$100 million ($73 million; €67 million) from the country’s first healthcare social bond. The bonds, due 2027, pay a coupon of 3.25 percent, and will finance hospitals in Asian countries with low numbers of hospital beds per capita, nursing homes and healthcare facilities with a social impact. The bonds are guaranteed by the Asian Development Bank.
UK infrastructure investor HICL Infrastructure has signed a £400 million ($523 million; €479 million) sustainability-linked revolving credit facility with a consortium of lenders including Barclays, ING, RBC and Sumitomo Mitsui. The targets attached to the facility were not disclosed.
Norwegian state-owned hydropower company Statkraft has signed a €1.3 billion sustainability-linked revolving credit facility with a group of banks including DNB and BNP Paribas. The interest rate on the facility, which replaces a previous Norwegian kroner-denominated facility, is linked to development of new renewables capacity, a health and safety metric and the proportion of women in management positions.
In other Norwegian news, aluminium producer Norsk Hydro has signed a $200 million sustainability-linked loan with a group of six banks including BNP Paribas, DNB and Citi, to finance the switch from heavy fuel oil to natural gas at its Brazilian refinery, one of the largest in the world. The interest rate on the seven-year loan is linked to an emissions reduction target associated with the fuel switch, with the sustainability link also applied to an interest rate swap on the deal – the first sustainability-linked derivative to be signed in Brazil.
The quality of disclosure on sustainability-linked loans is “generally low” and the amount of detail disclosed correlates with the ESG performance of the borrower, a new study by the European Corporate Governance Institute has found.