Dutch development bank FMO issues inaugural €500m sustainability bond

Five-year issue taken by 50 “real money” investors

The Dutch development bank the FMO has issued its first ever sustainability bond, a €500m five-year transaction to back green and inclusive finance projects.

It said that more than 50 “real money” investors were involved, which it said highlighted the “growing interest in the sustainability feature of the bond”.

Participation was strong from the Nordic region (27%), the Netherlands (26%), Germany /Austria (14%) and France (13%). The FMO, which is 51%-government owned, said fund managers and pension funds/insurers accounted for 29% and 23% of distribution respectively.

It estimated that investors “with ESG considerations” accounted for around 75% of the issue.

“Through this transaction, the issuer confirms its commitment towards environmental and socially responsible funding and the development of the sustainability bond market,” the FMO said. The issue follows the second $1bn green bond from the World Bank’s IFC earlier this week which was heavily over-subscribed.The proceeds of the FMO bond will support renewable energy generation, energy efficiency, responsible agriculture, food production, forestry, transport, water supply and access, as well as microfinance institutions and small companies.

The FMO became a signatory to the UN-backed Principles for Responsible Investment (PRI) in 2011 – one of the first development banks to do so. It’s also a member of the Global Impact Investing Network (GIIN). It was also the first development bank to sign the Principles for Investors in Inclusive Finance (PIIF), an initiative co-developed by the PRI.

Joint bookrunners were Crédit Agricole CIB, J.P. Morgan and Rabobank.

The FMO has a €6bn portfolio and its investment philosophy is based around two pillars: financial return and impact via economic development relevance and high environmental, social and governance standards. It points to its high sustainability rankings from ESG researchers Sustainalytics and Oekom.