Bonds & Loans: COP26 co-hosts Italy and the UK enter green bond market

A weekly overview of ESG developments for fixed income

The UK is to issue the world’s first green savings bond for retail investors. The bond will be aligned to the UK’s sovereign green bond framework, which has not yet been finalised, and will be offered through the state-owned savings bank National Savings and Investments. In today’s budget announcement, Chancellor Rishi Sunak separately announced plans for a minimum of £15bn of green gilt issuance for institutional investors in two deals: one in the summer and one later in the year.

Meanwhile, the UK’s co-host for the COP26 climate summit in November, Italy, is also made its debut today, selling an €8.5bn sovereign green bond. After the orderbook swelled to €80bn, the 2045 deal priced at 15 basis points above Italy's 2041 government bonds. The Italian Ministry of Economy and Finance published a green bond framework showing that proceeds will be used to support public spending aligned with the objectives of the EU’s green taxonomy: climate, water, pollution prevention, biodiversity and the circular economy. Crédit Agricole and Intesa Sanpaolo acted as structuring advisors and a second opinion was provided by Vigeo Eiris. 

TMX, the parent company of the Toronto Stock Exchange, has launched a trading platform for sustainable bonds, which will allow retail investors to trade in ESG debt. The platform will initially offer $13bn green bonds from eight issuers, including the province of Quebec, but has plans to expand. The debt currently available for purchase has coupons ranging from 0.75% to 3.25% and the maturities range from 2022 to 2051.

King’s College London has prepared a Sustainable Financing Framework, which is aligned with the Green Bond Principles, Social Bond Principles and the Green Loan Principles. The framework, assessed by S&P Global, identifies the Sustainable Development Goals that will be supported by any fundraising under the programme: quality education, climate action, reduced inequality, good health & wellbeing, sustainable cities, access to affordable energy, and clean water & sanitation.

Foresight Group has issued two green bonds totalling €20m on the Borsa Italiana. The two bonds, one of €5m and one of €15m, will both be used to fund the construction of renewable energy projects in Italy.

Social, green and sustainable bond issuance by Spanish regional governments reached €3.4bn in 2020, according to a report from Morningstar – up from €1.9bn in 2019. Madrid remains the largest issuer of bonds (74.5%), with the remaining issuance from the Basque Country (25.1%) and Barcelona (0.4%).

Fiji has begun work on its first Sovereign Blue Bond. The island nation, which became the first emerging market to issue a green bond in 2017, is particularly at risk from tropical cyclones and climate change.

The Luxembourg Stock Exchange has announced a new segment for unlabelled green bonds, in partnership with the Climate Bonds Initiative. The list will focus on “issuers of debt securities that are active in climate-aligned sectors such as clean energy, low-carbon transport and but that may not have issued bonds in the labelled format”. 

Note: This article was updated after publication to clarify that the UK will issue green bonds for both retail and institutional investors.