Green Bond Round-Up, May 31: Repsol green bond won’t be included in main green bond indices

The latest green bond developments


Spanish oil and gas heavyweight Repsol will not have its green bond included in any of the key green bond indices, RI has learned. The controversial deal will be excluded from the MSCI green bond index on the basis that “there is little evidence to indicate that Repsol will be utilizing the proceeds of the green bond for activities that go beyond ‘business as usual’ energy efficiency improvements”. According to its latest technical note, MSCI – considered by many to have the most selective inclusion criteria for green bonds – said it acknowledged that the issuer sought to reduce its carbon footprint with the help of the green bond, but that it “does not consider general energy efficiency projects in industrial processes as eligible”. S&P said it does not comment on individual bonds in its indices, on the basis that it seeks “to limit the potential impact that our index decisions have on the market”. However, a spokeswoman said: “One of the eligibility criteria for our S&P Green Bond Index and S&P Green Bond Select Index is for the bonds to be flagged as ‘green’ by the Climate Bonds Initiative… If a company does not meet this criteria … then it cannot be included.” CBI put out a statement last week saying that it did not regard the Repsol bond as ‘greenwashing’ – an accusation levelled at it by some others in the market – but that it would not include the deal in its listings. “While Repsol’s bond does not directly invest in increasing fossil fuel output (an obvious no-no), refineries are still processing fossil fuels and any investment in making refineries more efficient, as this bond is aiming to, will likely extend plant operating lifetimes and therefore indirectly increase emissions over time,” it said. Index provider Solactive also bases its green bond index on CBI’s data, and confirmed it would not therefore include the transaction in its constituents.

Denmark’s municipal funding agency, KommuneKredit, has sold its first green bond in a €500m deal that attracted the likes of Alecta, Mirova, NN Investment Partners, Storebrand, Union Investment and Veritas Pension Insurance Company. The 10-year notes sold at 99.362%, giving them a coupon of 0.75%. Proceeds will finance eligible green projects that fall under water management, district heating, energy efficiency and clean transportation.


The Securities and Exchange Board of India (SEBI) has just published its green bond criteria online. The regulator laid out the sectors it will consider for financing under an eligible green bond, including: renewables, clean transportation, water management, climate change adaptation, energy efficiency, sustainable land use, biodiversity and waste management. It also defines its reporting expectations and the responsibilities of the issuer.Japan’s Government Pension Investment Fund (GPIF) will commission research on green and social bonds, RI reported last week. The $1.1trn pension giant, which has been hitting the headlines lately for its efforts in the environmental, social and governance space, has put out a tender for information on ESG in bonds. This includes a section on “markets of green and social bonds”. Japan recently released its national green bond guidelines and the market is expected to pick up for both investors and issuers in the second half of this year.

China’s Longyuan Power Group Corp has sold CNY2bn (€258m) in green bonds, according to reports. The five-year deal had a coupon of 4.9%, but reports say it can adjust the rate in future. The firm operates 17.4GW of wind capacity, as well as a small amount of other renewable generation, and will use the bond to build new sites and repay debt for eligible assets.

North America

Export Development Canada has issued a green bond, which will finance projects including the construction of “the largest succinic acid plant in the world”, with a carbon neutral footprint. EDC is a Canadian institution created to help national companies grow overseas. It sold $500m of labelled notes into the US with a 1.625% coupon and a three-year maturity. Proceeds will be allocated to its green portfolio, with examples including renewable energy and public transport operated by Canadian firms in Australia, Germany and Ireland. EDC also includes in its list of green assets the “construction and operation of the largest succinic acid plant in the world, with a carbon neutral footprint and a production process that employs renewable feedstock”. The bond has a second-party review from Cicero.


Mexico City is reportedly gearing up to launch a green bond dedicated to water projects. The municipality came to market with its debut green bond in December, with a 1bn pesos deal (€47m) deal to finance mass transport, water projects, energy efficiency and renewables. According to reports, it will sell a further 1bn pesos of notes under the programme, specifically for water.