Green Bond Round-up, February 28: CDC, SEB, Nordic Investment Bank, Atrium Ljungberg, AP3, Quebec

The latest green bond market developments


Caisse de depots (CDC) saw investor demand reach €850m on its ‘no-grow’ green bond last week, with 45 investors buying the notes. The French agency, which functions as the government’s investment arm, said it was “a coincidence” that it came to market just weeks after the French state. “We started looking at this before the French government,” Frédéric Bonnardel, head of issuance at CDC, told RI. “It’s different from the French state’s green bond in terms of assets, transparency, reporting – there is no comparison between the two,” he said. Although, he added that it was “the general will” of French players to become leaders in the market. Unusually, the bond – which will finance renewable energy, real estate and the redevelopment of former industrial land – will focus on projects that are under development and construction, rather than refinancing operational assets. “Investors in the market are a little bit schizophrenic,” Bonnardel told RI, saying that they want additionality, which requires the financing of new assets, but they also want impact reporting conducted “on a real basis”, which means the projects need to be operational. In addition, many investors like to see the proceeds allocated over a short time period – in this instance, two years. “It’s clearly impossible to give the market the full lifetime of the project, because there’s no link between the maturity of the bond and the industrial lifecycle of the assets we can allocate to,” Bonnardel concluded. As RI reported yesterday, future bonds from Caisse de Depots are expected to include social and sustainability, as well as green, and will be sold through public issuance, private placements and club deals.

Swedish property giant Atrium Ljungberg is readying itself to enter the green bond market. The Baa2-rated firm, which claims to be one of the biggest listed real estate companies in the country, said in a statement last week that it had extended its medium-term note programme to SEK5bn, “including opportunities to issue green bonds”. Its green bond framework can be found here, and was reviewed by Cicero.
AP3 more than doubled its holdings in green bonds in 2016, according to its latest annual report. The Swedish pension fund grew its investments in the asset class from SEK4.5bn to SEK9.5bn over the course of the year. CEO Kerstin Hessius said the figures “cemented AP3’s position as one of the largest Nordic investors in green bonds”.

SEB has launched a new green bond publication, overseen by Christopher Kaminker – who joined the Swedish bank at the end of last year from the OECD. In its first edition, it predicts up to $150bn of issuance in 2017. It splits this across sectors and formats:
– Corporate Non-Financial ($39-47bn)
– Corporate Financial ($34-40bn)
– Sovereigns (USD 14-17bn)
– Agencies (USD 13.5-14.5bn)
– Regions, Cities and Municipalities ($12bn)
– Supranationals and multilateral development banks ($10bn)
– Securitisations ($4-6bn)
– Project Bonds ($3-4bn)
– Water ($4-7bn)
– Automotive ($3.5-4.5bn)
– IT ($2-3bn)*The Nordic Investment Bank* has issued its latest environmental bonds report. It issued €763m of green bonds last year, bringing its total issuance to some €2.1bn. It reiterated its plans to double issuance in “coming years” and said it had a strong pipeline of eligible assets already in place to help it achieve that target. Uniquely, NIB invites investors to visit some of the projects financed by the green bonds. “We think it’s important to show our investors the actual outcome of their investment decisions,” it explained. “These projects clearly illustrate the power and the responsibility that big investors have in making investment decisions that help us do both well financially, and good for society.” NIB also announced that in 2016 – its first year of investing in the asset class, as well as issuing – it bought €143m of green bonds.

North America

Quebec has launched a green bond programme, following in the footsteps of its neighbouring province, Ontario. The first deal under the programme, a C$500m five-year offering, was sold last week. Further terms have not yet been disclosed. Cicero assessed the green bond framework and awarded it a ‘dark green’ rating. According to its framework, eligible assets are wide ranging, but the specific projects identified by Quebec comprise four public transportation initiatives.


Real estate developer Longfor Properties has become the first of its kind to issue a green bond in China’s interbank bond market, selling RMB3bn of labelled notes last week via a its subsidiary, Longfor Chongqing. Proceeds from the deal, which was issued in two tranches, will be used to finance green buildings. The first tranche was a five-year offering with a coupon of 4.4%, while the second was a longer, seven-year tranche offering 4.67%, according to reports. Longfor’s plan to tap the green bond market had been confirmed last year, but this is its first deal in the space.
Indian regulator Sebi is preparing to publish its final guidelines for green bonds. According to local media, the body will now launch the rules, having taken into consideration comments from India’s Ministry of New and Renewable Energy. The long-awaited guidelines were first proposed in 2015, but while China pushed through its own national guidelines very quickly, India’s floundered – some say because of a lack of government enthusiasm.
Indonesia also seems to be making progress on green bonds with reports that its Financial Services Authority will create a national framework for the market too. Link