Green Bond Round-up, April 4: Kenya, Japan, Kommuninvest, Comunidad de Madrid, Kommunalbanken, Goldman Sachs

The latest green bond market developments

It’s been a busy week for green bonds, and predictions for market growth this year continue to roll in. SEB has predicted issuance of between $125bn and $150bn for 2017, in its latest report. Last week, Bank of America Merrill Lynch said it thought issuance would hit between $90bn and $120bn in a “base-case scenario” and up to $150bn in a “bull-case” trajectory. BlackRock’s Ashley Schulten told RI last month that she thought “at least another $100bn in 2017 will probably play out”.

S&P is widening its Green Evaluation Tool service so that it no longer just covers labelled green bonds, but other financial instruments too, including blue bonds, loans, infrastructure and equity portfolios. The tool, which was launched in September and has been used to assess “a representative sample” of labelled bonds so far, will be formally expanded in coming weeks, S&P said, to mark the fact that green finance is at “a classic inflection point”. The ratings giant has launched a report looking at the state of the market, which claims: “the next step is developing industrial-strength evaluation and benchmarking systems that will give investors and issuers a consistent, rigorous, and transparent method for assessing—and ultimately pricing—green issues.” It’s hoped it will eliminate lingering questions about “greenwashing”.


Kenya has moved forward on its long-awaited plans to issue green bonds, at the same time as Nigeria is in the market to issue its debut deal. In cooperation with the Climate Bonds Initiative and Dutch development bank FMO, the Kenya Bankers’ Association will develop a framework for the “industry’s first pooled green bond facility”. Set up as a special purpose vehicle, it will function as a warehousing facility: commercial banks in Kenya will be able to sell eligible green loans to the SPV, which can then refinance them via green bonds once it has enough scale. Commercial banks in Kenya are often too small to be able to issue green bonds individually.


Japan has launched its national green bond guidelines after months of discussion. The government created a working group dedicated to developing the green bond market in October last year. Members include representatives from Goldman Sachs, PwC and the Development Bank of Japan. The guidelines are based on the Green Bond Principles. The city of Tokyo is expected to issue a green bond off the back of the launch.

The Asia Development Bank will issue its first Uridashi green bond next month, it has said. Working with Daiwa Securities – another member of the Japanese green bond working group – the ADB will sell the notes to retail and institutional buyers.


Empresas CMPC, which has forestry, pulp and paper facilities across Latin America, has issued a green bond to finance sustainable forestry, water management, biodiversity, forest restoration, pollution prevention and energy efficiency. Sustainalytics conducted the second-party review.h6. Europe

The European Commission’s High Level Expert Group on Sustainable Finance has named green bonds as one of its six priorities as it develops policy recommendations to help move the EU’s financial markets to a more sustainable model. The HLEG publishes its interim report in July, to coincide with the G20 Leaders Summit.

Madrid has issued its first sustainability bond, which will finance climate change and environmental management as well as social projects such as affordable housing, education and healthcare. The €700m, five-year deal was issued by Comunidad de Madrid and offers a 0.747% coupon. Sustainalytics performed the second party review. Demand reached nearly twice the offering and the notes were allocated to investors in Spain (37%), Germany (21%), ‘other Europe’ (13%) and Benelux (12%). ESG investors took just over half the bond.

Swedish municipal lender Kommuninvest has published its first green bond impact report. It issued two green bonds last year, which financed 81 local government projects. Link

Norway’s Kommunalbanken has also published its first green bond impact report, garnering praise from investors including Mirova and BMO. The municipal lender has issued $1bn of green bonds since its debut in 2013, with a portfolio of green loans totalling $1.3bn. The report outlines the energy and carbon savings from the projects financed. Yo Takatsuki, who oversees green bond investments at BMO, said he welcomed improvements KBN has made to its green bond framework “which made it more transparent for investors to better understand the projects the bond proceeds are financing”.

North America

Goldman Sachs Japan has bought a JPY5.4bn ($47m) asset-backed green bond from solar module manufacturer Canadian Solar. This is the second time the Chinese-Canadian firm has sold a private placement of green notes to Goldman, having partnered on a similar deal last year. This time, the transaction is claimed to be the first of its kind to have “dual-tenor maturity”, which means the tenor can be extended from 1.5 years to 20.3 years. The notes will initially pay a coupon of 1.2875%. If the tenor is extended, the coupon will change to 1.3588% for the remainder of the bond’s lifetime. Proceeds will be used to finance a plant being developed in Japan. The bond has a second-party review from think-tank-cum-financial consultant, Japan Research Institution.


Australian real estate investment trust (REIT), Investa Office Fund has come to market with a A$150m, seven-year deal that was more than three-times oversubscribed, and was upsized from A$100m as a result. Some 74% of final buyers were asset managers, and just over half were dedicated green investors/mandates. Proceeds will be used to finance energy efficient buildings. The bond has a coupon of 4.262% and is certified by the Climate Bonds Initiative.

Commonwealth Bank has issued a five-year, A$650m ‘climate bond’ to finance renewables and low-carbon projects in Australia. Twelve assets have been identified. Ernst & Young has reviewed the green bond framework against Climate Bond Initiative’s standards. The notes were split into fixed and floating rate tranches.