Green Bond Round-up, November 28: Now:Pensions and Zurich step up investment, deals from Sweden, UK, US India and Aus

Europe

UK investor Now:Pensions has entered the green bond market as an investor. Investing through its £520m Diversified Growth Fund – which accounts for the lion’s share of its entire assets under management (£545m), NOW says it has already channelled £65m – or 13% of the fund – into the asset class. It has bought notes in GBP, USD and Euros, so far. Trustee Director Win Robbins said supporting environmental projects was beneficial to its scheme members, and “cannot be left solely to governments”.
Alecta, Robur, Folkamgruppen, SPP/Storebrand, Telenor Pensjonskasse, AI Lension, Linkopings kommun, Kalmar Lans Pension and Ohman were among those to buy notes from Swedish state-owned real estate firm Specialfastigheter, which issued its debut green bond last week. The SEK1,250m bond will finance certified low-carbon buildings, energy efficiency projects, renewable energy installations, sustainable forestry and sustainable water management. Helena Lindahl, who manages the world’s largest green bond fund for SPP/Storebrand, said the issuer’s move into the asset class was “much appreciated”.
Zurich has upped its commitment to green bonds as part of a wider pledge to finance more impact investments. It will also develop an assessment framework to gauge the impacts of its investments across asset classes, in a bid to standardise the reports it receives from issuers and others it invests through. For the full story, see here.
The UK’s ‘Super Sewer’ is now being supported by green bonds, after its holding company launched a green bond programme. Officially known as Tideway, the project is owned by a company called Bazalgette Tunnel, which raised £250m in labelled notes last week, through its debt-financing platform. The coupon is 2.375% and the tenor is ten years. S&P provided an evaluation of the green bond, which will prevent London’s sewerage being released into the Thames, thus reducing pollution.

North America

New York’s Metropolitan Transportation Authority, which runs public transport across the state of New York, has issued more green bonds, rated AA+ by Kroll Bond Rating Agency and certified against the Climate Bonds Initiative standards. The $2.1bn, 10-year deal was reportedly sold to retail and institutional buyers, getting strong demand from both.h6. Asia

UN Environment has released a paper looking at green finance in China, in collaboration with the International Institute of Green Finance – part of the Central University of Finance and Economics. The report “does not gloss over the cracks of green finance in China”, its authors say, adding that it offers readers the chance to “peek under the hood of green finance in China”. The country has become a leader in the climate finance movement, with most of its international activity taking place around green bonds. The report says that clearer definitions are needed around ‘green’, and it pushes for banks in the country to have greater clarity around their responsibility for green lending and environmental risk assessments within mainstream loan books.
India’s Power Finance Corporation will sell $450m of 10-year green bonds this week, according to reports. The state-owned firm secured permission earlier this year to issue tax-exempt bonds, which it said at the time would include green transactions. Proceeds from the inaugural deal are expected to be used to finance renewable energy projects.

Australia

Westpac Group has settled its third green bond – a €500m, seven-year deal. Proceeds will finance renewable energy, low-carbon commercial buildings and rail transport. Westpac issued its first deal in 2016, on the domestic Australian market. “This time we focused on Europe’s more mature Socially Responsible Investment market where there is a larger pool of investors,” said Richard Salmon, Westpac’s Director of Balance Sheet Funding, Treasury. “We found these investors were very active and receptive to Westpac’s excellent sustainability credentials.” He added that access to the European SRI market is a “great opportunity”, offering “relative value against other currencies”. The bond is certified against the Climate Bond Standards.