Bonds & Loans: Hong Kong airport planned green bond branded ‘high-flying greenwashing’

A weekly overview of ESG developments for fixed income

Hong Kong’s airport authority has been accused of “high-flying greenwashing” by NGO Reclaim Finance over a planned 5-year green bond. The authority held investor calls yesterday over a potential $4bn multi-tranche bond, which would include a green bond of an as-yet unannounced size, according to reports in Reuters. The authority launched its sustainable finance framework on Monday with a second party opinion from Sustainalytics. However, Reclaim Finance said that the bond, the non-green portions of which will finance a third runway, would contribute to an increase in the airport’s emissions and threaten the highly endangered Chinese white dolphins which live in the waters off Hong-Kong. In 2021, Korean, Mexican and Indian airports issued green bonds, while Rome airport raised €500m from a sustainability-linked bond tied to Scope 1, 2 and 3 reductions and achieving a specified grade on its Airport Carbon Certification.  

Greece will issue its first green bond in the second half of 2022, its public debt agency has said. The issuance will be euro-denominated and of benchmark size, with a medium to long-term maturity. The agency said that the bond would strengthen Greece’s investor base by attracting new types of investors, and would “anticipate the growing impetus of credit rating agencies for environment-related assessment criteria”. 

2022 could be “a pretty significant year” for sustainable debt in the North American power and utilities market, according to S&P Global Ratings’ Head of Sustainable Finance. Michael Ferguson said that utilities are “prodigious and natural debt issuers”, and that the power sector was “ripe for disruption” when it came to sustainable finance. While there is no obvious pricing advantage for green bonds in the sector, Ferguson suggested that sustainability-linked bonds could be a way forward for issuers to raise discounted debt. 

Spanish renewables firm Opdenergy Holding has announced the launch of a €100m green bond programme. Santander will act as green bond structuring agent for the bonds, which have been registered with Spain’s alternative fixed income market, MARF. 

Saudi National Bank, the country’s largest financial institution, has launched a sustainable finance framework with a second party opinion from S&P Global. The framework identifies three areas of eligible expenditures: renewables, environmentally sustainable management of living natural resources and land use, and SME financing. The SPO gives the bank the second highest score of ‘strong’ for its proposed use of proceeds, and second lowest score of ‘aligned’ for project selection processes and reporting. S&P has also published SPOs for Nigeria’s Access Bank and green mortgage platform CMIS Impact Hypotheken. 

Indian chemicals firm UPL has raised $700m from the second tranche of its $1.45bn sustainability-linked loan, signed with a group of four banks including Rabobank and MUFG. The interest rate on the debt, the majority of which matures in 2026, will be reduced by 5bp if the firm hits targets relating to carbon emissions, water consumption and waste discharge. 

Italian shipbuilder Fincantieri has signed a €300m sustainability-linked loan with Intesa Sanpaolo and Cassa Depositi e Prestiti to finance the construction of a cruise ship. The interest rate on the loan will be adjusted based on the firm’s progress against energy efficiency, supply chain sustainability and employee training targets. Meanwhile, bulk shipping firm d'Amico International Shipping has signed a $43m sustainability-linked term loan with ABN Amro. The interest rate on the 5-year loan, which refinances an existing loan for three oil and chemical tankers, is linked to reductions in the carbon intensity of the firm’s tanker fleet.