EBRD and Deutsche Bank team up to issue green bonds

€18m issue aimed at Japanese investors

The European Bank for Reconstruction and Development and Deutsche Bank have launched green bonds to finance environmental projects.

The proceeds of the ‘Environmental Sustainability Bonds’ will support a projects aimed at promoting sustainable development and clean energy technologies in central and eastern Europe and central Asia, the duo said in a statement.
They would also help to improve energy efficiency, water and waste management, environmental services and public transport.

The bonds, denominated in Australian dollars, will fund the renewal of water and power infrastructure to cut greenhouse gas emissions.

They pay a fixed rate coupon of 4.80%. The new AU$25m (€18.1m) issue matures in 2014.

The issue was arranged by Deutsche and distributed by SMBC Friend Securities to Japanese retail and institutional investors.Around 20% of the EBRD’s annual investments are dedicated to sustainable energy projects – it has an environmental investment portfolio worth €1.9bn.

The EBRD was set up in 1991 with the aim of assisting countries to develop into market-oriented economies.

The latest green bonds follow earlier issues by the European Investment Bank and the World Bank’s IFC arm.

Meanwhile, green asset manager Climate Change Capital has recently released an assessment of the potential of green infrastructure bonds. Such bonds, issued to refinance operational
cash-flow producing low carbon infrastructure, are “essential if we are to access the low cost capital needed to deliver our transition to a low carbon economy”.

“Without a liquid market in them, finding the capital required will be significantly harder and also more expensive,” the report states.