The European Investment Bank (EIB), a leading issuer of green bonds, or as it calls them “Climate Awareness Bonds (CAB),” plans to raise another €250m from European institutional investors with its latest tranche of CABs due in November 2026 and paying a coupon, or interest rate, of 1.25% per annum.
The bookrunners for this round of CABs are BNP Paribas, Rabobank, Royal Bank of Scotland as well as DZ Bank, the central bank for German cooperatives and Landesbank Baden-Württemberg. The EIB said that as a result of the issue, it will have raised €1.25bn with the CABs, which are traded on Luxembourg’s bourse.
According to the EIB, proceeds from its CABs are strictly used to finance renewable power like wind, solar and hydropower as well as energy efficiency projects like building insulation, cogeneration and district heating. The EIB was a pioneer of the green bond market, issuing its first CAB in 2007.
Said Eila Kreivi, the EIB’s Head of Capital Markets: “Today’s issue continues our action in support of the sustainable development of the green bond market. It strengthens the benchmark status of the longest reference issue in the segment (namely CABs) and draws market attention to the definition of minimum requirements, best practice and governance.”The EIB also named three investors in the latest tranche of CABs – Dutch development bank FMO, the International Fund for Agricultural Development (IFAD) and Union Investment, the asset manager for German cooperative banks. Alexander Schubert, Portfolio Manager at Union, said his firm bought into the issue as it completed lacked “window dressing and greenwashing.” Added Arthur Leijgraaff, Senior Treasury Officer at FMO: “CABs issued by the EIB align with our green investment criteria and contribute to the development of the socially responsible investment market.”
The EIB’s latest CAB comes two days before a new edition of the Green Bond Principles (GBP) will be published in London. Created in January 2014 by banks that underwrite green bonds, the principles are supposed to help investors determine whether the green bonds they invest in truly have an environmental benefit. However, the principles do not include an assurance from the banks themselves that the green bonds they underwrite are in fact “green.”
The EIB, which serves on the GBP Executive Committee, said it would publish it latest CAB newsletter to coincide with the GBP event on Friday.