Bonds & Loans: First SSA SLB, India to issue green bonds

A weekly overview of ESG developments for fixed income

The Indian government has announced it will issue its first green bonds in 2022/23 as part of its budget. The government said that the bonds would raise money for green infrastructure, and the proceeds would be allocated to “public sector projects which help in reducing the carbon intensity of the economy”. 

The Swedish city of Helsingborg has become the first government issuer to raise money from a sustainability-linked bond. The city, home to around 150,000 people, raised SEK500m (€47.8m) from the 4-year 0.75% bond, which was privately placed with SEB and arranged by Danske Bank. The final coupon on the bond will be 15bp higher if the city has failed to meet its CO2 reduction target for 2026 in line with its Net Zero by 2035 commitment.  

Chile has raised $4bn from a triple-tranche sustainable bond. The country, which has raised $31bn in labelled bonds since 2019, saw a total of $20bn in orders from 654 investors, and raised $1.5bn from a 2.75% bond maturing 2027, $1.5bn from a 3.5% bond maturing 2034 and $1bn from a 4% bond maturing 2052. 

In other sovereign news, Qatar is planning to issue its first green bond, with the country’s Ministry of Finance in early talks with banks ahead of a potential multi-billion raise, according to reports in Bloomberg. Mauritius has also reiterated its intention to issue a green bond. 

The Climate Bonds Initiative has predicted that yearly green bond issuance could reach $2.5trn in 2024, rising to $5trn in 2025. Labelled sustainable debt hit $1.2trn in 2021, with 21 sovereign green bonds including two deals from the UK, which was the largest issuer, followed by German development bank KfW and US mortgage firm Fannie Mae. Meanwhile, a new report published by Moody’s ESG predicts total sustainable bond issuance will hit $1.35trn this year. The firm also hired Tobias Lindbergh from Handelsbanken this week to head up its SPO business in the EMEA and APAC regions. 

BDO Unibank, the Philippines’ largest lender, has raised P52.7bn (€915m) from its inaugural green bond, and the country’s largest ever non-sovereign bond. The 2-year bond, which pays 2.9%, was upsized from its original offer of P5bn after “very strong demand” from retail and institutional investors, the bank said. 

Hong Kong’s ESR Cayman has signed a ¥28bn (€217m) sustainability-linked loan with a consortium of Asian banks including Sumitomo Mitsui, Mizuho and E.Sun Commercial Bank. The interest rate on the loan, which has an option to upsize to ¥35bn, will be reduced from its current rate of Tibor plus 1.8% if undisclosed sustainability targets are reached.

Social infrastructure firm Samhällsbyggnadsbolaget i Norden has raised €700m from its first floating rate social bonds. The 2-year notes pay 3-month EURIBOR plus 55bp, and will be partially used to repay an existing €600m bond which is due in February 2023, as well as being allocated to eligible social assets. 

Green bond issuance by US real estate investment trusts reached $11.97bn and accounted for 15.5% of REIT proceeds for the year, according to figures from S&P Global. 2021 was the fourth year in which issuance levels have increased, with JP Morgan underwriting the largest volume of issuance, followed by BofA Securities and Citigroup. 

European real estate manager Europa Capital has signed a €210m sustainability-linked revolver with RBS International. The interest rate on the facility is linked to improved waste diversion, green energy usage and minimum energy efficiency ratings for refurbishment and redevelopment projects. In other real estate news, Frasers Property Group has signed a £110m sustainability-linked loan for its UK business with Maybank Singapore. The interest rate on the loan will be reduced from its second year if Frasers Property is able to maintain its four-star GRESB rating. 

Swiss utility Axpo has raised Sfr500m (€482m) from its first ever sustainability-linked bond, and the second ever Swiss franc-denominated SLB. The dual tranche bond saw Axpo raise Sfr200m from a 0.25% note due 2025 and Sfr300m from a 0.625% note due 2027, linked to a target of achieving 1.5GW of renewable energy by 2024 with a 20bp penalty and 2.3GW by 2025 with a 34bp penalty, respectively. However, some investors were unable to participate in the deal due to the firm operating two of Switzerland’s three nuclear power plants.  

Spanish telecoms firm Cellnex has added ESG targets to its extended €2.5bn revolving credit facility. BNP Paribas and BBVA acted as joint sustainability-coordinators for the 25-lender deal, which will see Cellnex’s interest rate linked to reductions in scope 1 and 2, and some scope 3 emissions, reaching 100% renewables usage and increasing the percentage of women in senior management roles. 

The Inter-American Development Bank has privately placed a A$180m (€113m) sustainable development bond with Meiji Yasuda, while its investment arm has bought COP75.6bn (€17.2m) of social bonds from Mibanco. Proceeds from the social bonds will be used to finance the growth of women-owned or led micro-enterprises in Colombia. 

UK car leasing company Zenith has raised £475m from its inaugural green bond, which it said it plans to spend on electric vehicles.