Green Bond Round-up, October 11: BNP Paribas, TenneT, TD Bank, Kommuninvest

On the transaction side, it’s been another week dominated by European issuers, but there has also been a lot of engagement with standard-setting in the green bond market this week. RI reported last week that the Japanese environmental ministry is putting together a working group to create national guidelines around green bonds. According to one report from a local research house, the guidelines may be “gentler” than the Green Bond Principles, in order to make it easier to issuers to come to market.
Meanwhile, real estate research body GRESB has updated its guidelines for green bonds issued in the property sector to include a list of KPIs [Key Performance Indicators] and certification schemes that issuers could adopt, along with recommendations on monitoring and reporting. According to GRESB, green property bond issuance is more than $10bn so far this year, accounting for 21% of the overall market.
PwC has become the latest verifier under the Climate Bonds Initiative’s certification programme. PwC’s Director of Risk Assurance, Damian Regan, said there is an increasing move towards standardisation and certification in the green bond market, illustrated most recently by Bank of England Governor Mark Carney’s speech last week.

Europe

BNP Paribas is getting closer to becoming the latest bank to tap the market. One banker close to the deal said it was “a matter of weeks” until the inaugural transaction is launched. “We wanted to come with a programme, not a one-off deal, so it’s taken a bit more work,” he told RI. Other commercial banks to have issued green bonds include Credit Agricole, HSBC, Morgan Stanley, Bank of America Merrill Lynch, Yes Bank and Bank of China. Rabobank came to market last week with a sustainability bond programme, and Société Générale sold its second ‘positive impact’ bond for renewable energy.

TenneT has returned to the market with a 17-year green bond to finance offshore wind transmission lines. The €500m deal has a coupon of 1.25% and brings the Dutch grid firm’s green bond issuance to €3bn, despite having only entered the market last year. It has identified five specific projects to receive support from the proceeds of the deal, which has a second-party assessment from Oekom.Tomorrow, Sweden’s local government debt office Kommuninvest will begin investor calls for its second green bond. The issuer’s broader funding programme dictates a 50:50 split between USD and domestic currency, so it will balance its inaugural transaction from March – which was done in USD – with its first ever Swedish krona green bond. A spokesman for Kommuninvest told RI that its green bond programme would be “a substantial part” of overall fundraising. “We expect between 15% and 20% of our lending to be green in the future, and that will translate into green bonds in many cases,” he said. This deal will be between SEK3bn and SEK5bn, and will have a three-year tenor. The proceeds will be used to finance “climate friendly” projects in accordance with Kommuninvest’s green bond framework.

RI reported last month that energy giant EDF seemed to be preparing for a third green bond, which it has now issued. Like its first two, this one is a massive transaction at €1.75bn. It has a 10-year maturity, a coupon of 1% and will be used to finance renewable energy projects. It’s now issued more than €4bn of labelled green bonds.

Canada

TD Bank (Toronto Dominion) looks set to issue its second green bond. RI was unable to confirm with the bank before going to press, but it has published a new green bond investor presentation and updated its second-party opinion. The bank became the first in Canada to issue a green bond when it came to market with a C$500m deal in 2014, which is due to mature in April.

Ontario will issue its third green bond before the financial year is out, according to the Climate Bonds Initiative. The province has been a leader in the municipal green bond space, having first come to market two years ago with a benchmark deal, returned earlier this year with another one. The two bonds total CAD1.25bn. The announcement was made at the launch of the CBI’s report on the Canadian green bond market.