Bonds & Loans: Germany bags its biggest ‘greenium’ to date

A weekly overview of ESG developments for fixed income

Investor demand hit nearly €40bn for Germany’s latest green bond, which priced at 2bps below a conventional equivalent issued at the same time. The €6bn, 30-year deal was the longest-dated the German Government has issued so far, and fulfils its pledge earlier this month to offer notes with an increasing maturity to help build a benchmark green yield curve for the Euro market. For every green sovereign it issues, the government sells a conventional ‘twin’ deal. The latest bond priced at 0.391% – the biggest ‘greenium’ Germany has secured so far.

Chile has issued $1.7bn in social bonds, due 2041. The deal, which launched alongside $300m in regular bonds, has a coupon of 3.1%. Proceeds will be allocated to eligible social projects including food security, support for human rights victims and affordable housing.

Global bond and loan issuance linked to female empowerment or representation has exceeded $9bn, according to analysis from Moody’s, which has rated the issuance of such instruments ‘credit positive’ due to reduced operational and reputational risk. A large portion of this figure comes from a $4.1bn revolving credit facility signed by Carlyle Group in February, which has its interest rate tied to increased board diversity. A further $1.3bn came from two bonds from the IFC. 

Meanwhile, Moody’s figures also reveal that sustainable bond issuance reached a record $231bn in Q1 2021 – more than triple issuance in the same period last year, and representing 9.4% of global bond issuance. Moody’s estimates that 8-10% of global issuance in 2021 could be sustainable bonds. 

Amazon has issued a $1bn sustainability bond as part of a larger $18.5bn bond issuance. Proceeds from the bond will be spent on eligible projects, including Amazon’s efforts to electrify its vehicle fleet and improve the environmental performance of its buildings. The retail giant reportedly said it may also use proceeds for private equity investments into clean transport and zero carbon buildings. 

UK affordable housing aggregator The Housing Finance Corporation has launched a new social bond framework, and converted £1bn of its previous issuance to social bonds. The framework, which was rated as ‘advanced’ by a second party opinion from Vigeo Eiris, is also aligned with the sustainability reporting standard for social housing. 

€67bn Swedish private equity firm EQT has priced a €500m sustainability-linked bond. The notes, which were than three times oversubscribed, is tied to three KPIs: establishing emissions reduction targets that are endorsed by the Science Based Targets initiative by the end of 2023; increasing female representation in investment advisory by 28% by the end of 2026; and raising the board diversity of portfolio companies to 36% by the same date.

Packaging company Vidrala has signed a sustainability-linked interest rate swap with BBVA, tied to a reduction in CO2 emissions. If the firm fails to achieve its targets, the cost of the product will increase, and the penalty will be allocated to a Tanzanian reforestation project.

Patrimonio Autónomo Montes de María has issued a COP760bn (€168m) social bond to fund an infrastructure project developing a toll road. The 30-year issuance is the first social bond linked to an infrastructure project in Latin America and is guaranteed by the US International Development Finance Corporation.

South African Absa Bank has received a $150m loan from the IFC in what it claims is Africa’s “first certified green loan”. The loan, which complies with the Loan Market Association’s green loan principles, will finance biomass and other renewable energy projects in South Africa.

German consumer electronics firm Ceconomy has signed a €1.06bn sustainability-linked revolving credit facility with a consortium of 13 banks. The facilities are split into a five-year €707m tranche and a three-year €353m tranche. Interest on the loan is linked to CO2 emissions reduction, number of sustainable products and number of women in management positions.

Raiffeisen Bank’s Romanian subsidiary has become the first lender in the country to tap the green bond, raising RON400m (€80m) to finance projects including renewables, energy efficiency, clean transportation and green buildings. The five-year, senior preferred bond, which has a yield of 3.086%, was 1.6 oversubscribed. The European Bank for Reconstruction and Development took the equivalent of €11m of the notes. 

South Korean internet firm Naver has issued $300m in ESG bonds in the re-opening of a previous issue in March. The firm had initially targeted a $200m issuance but increased the amount following strong demand from foreign investors. The five-year bond issued at US Treasury five-year plus 85bp, 25bp lower than its initial price guidance.

South Korean credit card company KB Kookmin Card Co. also raised $300m from its first ESG bond issuance. The five-year bonds were issued at US Treasury five-year plus 72.5bp.

Singapore real estate manager GLP has issued an $850m green bond. The orderbook for the initial target of $500m was more than six times oversubscribed, allowing GLP to increase the issuance. The five-year bond was issued with a coupon of 4.5%

Irish bank AIB has raised €750m from its second green bond issuance. The offering was twice oversubscribed and pricing was reduced by 20bps to 75bps over mid-swaps. 

Indian power company JSW Hydro Energy has raised $707m from a 10-year green bond issue. Pricing was driven down from 4.5% to 4.125% by an orderbook which was more than four times oversubscribed.

Food company Kellogg has issued its inaugural €300m sustainability bond. The eight-year deal has a coupon of 0.5% and proceeds will go towards Kellogg’s ‘Better Days’ commitment to tackle hunger and wellbeing and enable climate resiliency.