EIB becomes first green bond issuer to link project allocations to specific bonds

Move towards greater transparency is in response to investor demand

The European Investment Bank (EIB) has become what’s believed to be the first green bonds issuer to link project allocations to individual bonds.

Its latest newsletter inaugurates the practice of reporting how it allocates the proceeds of each bond, which it says comes in response to investor demand. The EIB’s term for green bond is ‘Climate Awareness Bond’ (CAB).

The bank issues 10-15 CABs a year and admits that so far they have just been “lumped together”.

But it has upgraded its internal systems so that it can now break out the data – useful for investors who are looking for a clearer picture of their CO2 emissions, said Eila Kreivi, its Head of Capital Markets.

For example, the Greater Gabbard offshore wind farm in the North Sea off the UK coast has a total of €466m EIB backing. It breaks down into €126m from the EUR CAB due 11/26 and €340m from the USD CAB due 10/24.

Users can now also click through via the newsletter to access Environmental and Social Data Sheets (ESDS) for projects, whether it be a combined heat and power project in Vladivostok or a hydro project in Zambia.It comes as the EIB yesterday (October 1) announced a €400m ‘tap’ of its 2023 CAB to €1bn – taking its total CAB issuance to €10.5bn. Joint bookrunners for this transaction were Credit Agricole CIB, Rabobank, SG CIB and Unicredit.

There has also been a development in a project to foster harmonized reporting on renewable energy and energy efficiency by development banks. Building on a working group formed of the International Bank for Reconstruction and Development (IBRD), the World Bank’s IFC, the EIB and the African Development Bank which issued a proposal earlier this year, six other International Financial Institutions (IFIs) have become involved. Kreivi said this was very much a “work in progress” and that there is a lot of willingness to make it work.

Last month research from Barclays claimed green bonds are trading at a premium in the secondary market. Analysts said investors have been paying an extra 20 basis points for them, which they partly attributed to “opportunistic pricing” based on strong demand from environmentally focused funds.