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European Investment Bank issues $1.5bn Climate Awareness Bond

Meanwhile, SEB teams up with Germany’s GIZ on emerging markets green bonds

The European Investment Bank (EIB), a pioneer of green bonds, or as it calls them Climate Awareness Bonds (CABs), has issued what is says is its biggest CAB ever, raising $1.5bn (€1.3bn) in the process.

The EIB’s ten-year CAB is the second denominated in US dollars. Its first dollar-denominated CAB was issued in October 2014, during which the bank raised $1bn. Total outstanding issuance for the EIB’s CABs is now more than €14bn.

Rated triple ‘A,’ the EIB’s latest CAB pays a semi-annual coupon, or interest rate, of 2.125%. This is 37.5 basis points more than what a ten-year US Treasury issued in February was offering, the bank said. Underwriters of the bond were Barclays of the UK, as well as US banks Bank of America and J.P. Morgan.

Under the CAB programme, the EIB uses the proceeds to finance projects in the renewable energy and energy efficiency spaces across Europe.

Elsewhere, Swedish bank SEB has teamed up with German economic development agency GIZ to promote green bond issuance in the emerging economies of China, India, Brazil and Mexico. A chief aim of thealliance is to identify public and private entities that wish to enter the growing market for green bonds.

“Moreover, SEB and GIZ will offer the entities training and advice about green bond standards in an effort to create an attractive and functioning market in the four countries,” the partners said in a statement.

Owned by the German government, GIZ offers training and know-how to companies in emerging markets. “We are proud to have GIZ as a partner, for together we can create a green bond market in some of the world’s fastest-growing industrial nations,” said Christopher Flensborg, Head of Climate Financial Solutions at SEB. Flensborg noted that GIZ had the contacts in the countries, while SEB had the green bond know-how and access to big investors.

Christoph Beier, the GIZ’s Deputy CEO, added that the cooperation with SEB was essential to helping the four countries transition to a low-carbon economy. “The governments (of the countries) alone cannot meet this challenge. They need the support of the private sector and global markets… And green bonds are an important tool in that effort,” Beier said.