Bonds & Loans: EU raises €20bn, African Development Bank doubles social bond due to demand

A weekly overview of ESG developments for fixed income

The EU has raised €20bn from its debut NextGenerationEU covid recovery bond. The 10-year bond did not specify use-of-proceeds, but will support the economic recovery from the pandemic and “help build a greener, more digital and more resilient Europe”. Demand for the 0% bond – the largest ever institutional issuance in Europe – reached €142bn with a re-offer yield of 0.086%

The African Development Bank doubled its take on a ‘kangaroo’ social bond after strong interest from investors. The planned A$250-300m issuance was upsized to A$600m on an orderbook of A$775m. The bank has issued social bonds in five foreign currencies, the proceeds of which are spent on mitigating social issues across the continent, including improving access to electricity and clean water and generating employment.

Sustainable debt has passed the $3tn mark, a third of which has been issued in the past eight months, according to data from BloombergNEF. The explosion in issuance was helped by a 720% increase in social bond issuance from 2019 to 2020, it said.

Retail Charity Bonds has launched a sustainability bond framework to help it raise money for charities involved in affordable housing or disadvantaged communities.

Kensington Mortgages has raised £750m in asset-backed green bonds to purchase mortgages for energy efficient homes. Strong investor demand for the deal, which Kensington says is the first green bond issuance in the UK asset-backed securities market, saw the firm raise its fundraising target from £480m. 

Singapore’s Far East Hospitality Real Estate Investment Trust has closed a sustainability-linked interest rate swap with The Oversea-Chinese Banking Corporation (OCBC). The 2.5-year $85m deal allows Far East to fix its interest rate on a sustainability-linked loan it agreed with the bank in March. The deal will see Far East Hospitality receive a decreased rate if it achieves sustainability targets including reductions in energy consumption for its properties.

Meanwhile, fellow Asian REIT, Hong Kong’s Champion, has signed a HK$3bn (€318m) sustainability-linked revolving credit facility with OCBC and seven other banks. Champion will receive a discount if it reduces its emissions intensity and retains its position on the Hang Seng Corporate Sustainability Benchmark Index.

Norwegian real estate firm Entra has raised a further NOK300m (€30m) from the re-opening of an eight-year green bond to finance  properties with a BREEAM sustainability certification of ‘excellent’ or above. 

Education firm Applus+ has signed a €100m, two-year sustainability-linked loan with Caixabank, with a lower interest rate if it cuts its CO2 emissions by 17% by 2023. 

Polish solar developer R.Power has raised PLN150m (€33.6m) in the first phase of its planned PLN1bn green bond programme to fund the expansion of its solar portfolio across Europe. 

The Georgian State Railway has raised $500m from a seven-year green bond offering. The order book was six times oversubscribed for the deal, which priced with a yield of 4%. Proceeds will be used to finance electric rail lines with no direct emissions and associated infrastructure.

Swedish timber and paper firm SCA has raised SEK1.5bn (€148m) from a dual tranche, seven-year green bond to finance sustainable forestry, energy and waste projects under its green bond framework, which received the highest ‘dark green’ rating from Cicero Shades of Green.

Mexican conglomerate Orbia has raised $1.1bn from a dual tranche sustainability-linked bond. The five-year, $600m tranche priced at 1.875%, while the 10-year $500m tranche priced at 2.875%. The interest rate on the bonds is linked to Orbia’s performance against a targeted 44% and 60% reduction in sulphuric oxide emissions by 2023 and 2025 respectively.

Private equity fund Ardian has signed a €200m sustainability-linked loan with Unicredit to allow it to acquire Italian marketing technology firm Jakala.

Sustainable infrastructure firm Atlantica Yield has raised $400m from a green bond offering to finance the acquisition of renewable energy assets. The seven-year bonds priced with a coupon of 4.125%.

The Canadian Government has appointed HSBC and Toronto-Dominion bank as the structuring advisors for its planned inaugural green bond issuance. Canada said in April that it planned to raise up to CAD$5bn (€3.4bn) from the deal.