Today marks the 10th anniversary of the green bond market. Although not called ‘green bonds’, the European Investment Bank launched its Climate Awareness Bond programme this time a decade ago. To mark the event, it has now broken another record, selling a 30-year green bond – the longest-dated deal in the market. The development bank issued €1bn of notes, which knocked France’s 22-year deal, launched in January, off the top spot as the green bond with the longest maturity.
The EIB also used its 10th anniversary of issuing green bonds to launch a partnership with NGO We Forest. Under the reforestation scheme, it will plant trees in Africa, Asia and the Amazon based on how many signatures it can collect on a dedicated website, and for every € donated by global banks supporting green bonds. “The initiative would enable both private and institutional support for green bonds to tackle deforestation in vulnerable communities,” it said.
Europe
The European Covered Bond Council has teamed up with the Climate Bonds Initiative to create a European Green Securities Steering Committee. The committee, which has backing from the UNEP FI and whose members comprise 22 European banks, ratings agencies, NGOs and trade bodies, met for the first time last week. It plans to discuss how to develop the green bond market across Europe, with a particular focus on the promotion of covered and asset-backed securities. ABN Amro, Clifford Chance, Glennmont Partners and Obvion are among the members. Nick Robins, Co-Director of UNEP FI, said the initiative was “perfectly timed” to catch the wave of policy and market interest in green bonds. “Crucially, it will help to build trust and confidence in the potential of asset-backed securities for financing a sustainable economy,” he added. As well as seeking to identify regulatory hurdles around green covered bonds and securitisations, the committee will push for “common definitions” of green bonds at EU level and increased supply of green assets through the standardisation of contracts. It will explore the possibility of offering green bonds favourable treatment under current regulatory capital requirements and seek solutions to enable the aggregation of smaller green projects.
The City of Gothenburg has secured a rating from S&P Global Ratings for its green bonds. The credit ratings giant awarded the issuer E2/67 on green bonds it sold last year – the second highest rating on its scale. It was awarded 56 out of 100 for Transaction Transparency and 94 for Governance. It is the first time S&P has rated a municipal issuer using its Green Evaluation framework.Swedish property company Humlegården Fastigheter has come to market with its first green bonds, raising SEK1.25bn of five-year bonds with an undisclosed coupon. The firm, which is owned by 19 regional insurance companies to develop and manage real estate in Stockholm, will use the proceeds to finance green buildings in line with national standards known as ‘Miljöbyggnad’. Buyers include: Agenta Investment Management, Akademiinvest, Alfred Berg Fonder, Carnegie Fonder, Cicero Fonder, Handelsbanken Asset Management, If P&C Insurance, Monyx Financial Group, Naventi, SEB Investment Management, Storebrand, Swedbank Robur, Ohman and Strand Capital. The second-party opinion was provided by Cicero.
Asia
India’s state-owned Rural Electrification Corporation has sold its debut green bond, in a $450m deal to finance renewable energy assets and sustainable waste and water management projects. The 10-year deal, which has a yield of 3.965%, is certified against the Climate Bonds Initiative standards, and was issued as part of a wider, $1bn round of fundraising. The order book was 3.9x oversubscribed, with 32% of final buyers coming from Europe, the Middle East and Africa, while the lion’s share – 68% – were out of Asia. The notes will be listed on the London Stock Exchange.
Korea Development Bank has raised $300m of green bonds in its inaugural transaction. The five-year notes were allocated to investors in Asia (46%), the US (36%) and Europe (18%). 32% went to bank treasuries, while fund managers took 26%, central banks, sovereign wealth funds and agencies took 23%, pension funds bought 14% and private banks and others took 5%.
Other
Fiji is reportedly planning to issue a green bond. According to local media, the announcement of the national budget 2017/2018 included reference to raising $100m of green bonds. The transaction is reported to be expected before COP23 later this year.
Zimbabwe is also reported to be mulling issuing green bonds. One local outlet says the country plans a $200m deal to finance hydro and solar. CBZ Holdings is named as the bookrunner.
In Latam, Grupo Rotoplas has successfully issued a sustainable bond. The $2bn Mexican pesos deal saw orders reach 3.76 times what was being offered. Sustainalytics provided an assessment of the framework and proceeds will finance improvements to water and sanitation. The deal was issued in two tranches: $0.6bn Mexican pesos in three-year floating rate notes, and $1.4bn Mexican pesos of 10-year fixed rate notes.
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