Green Bond Round-up, Sept. 13: S&P, Mexico airport, EDF, Castellum, Iberdrola

The latest green bond developments

Major players from across the financial world have been championing green bonds this week, with the G20 getting behind the market at its annual summit in Hangzhou. Announced at the same event was the fact that S&P Global Ratings is gearing up to launch a ratings system for the asset class. Following in the footsteps of Moody’s, which created a green bond ratings tool in March, S&P has put the call out for market participants to give feedback on its plans. Whereas Moody’s focuses on the management of proceeds and whether the bond is aligned with the Green Bond Principles, S&P’s proposal is arguably more ambitious, as it plans to assess the environmental value of the deal, alongside the other aspects. The assessments would be made by an in-house team of climate-risk analysts, in partnership with Trucost – the environmental data firm being bought by S&P’s index division. Scores from E1 to E5 would be awarded, and would function completely separately from a credit rating. The initial focus will be on green energy, green transport, energy efficiency and green buildings, financed by labelled green bonds; but ultimately, S&P says the tool could be applied to all bonds. Interestingly, the score will assess projects based on the national environmental landscape as well as the technology – meaning, for example, it will favour bonds issued in countries most in need of decarbonisation. Who will pay for the service and other details will be decided after the consultation has closed on October 17.


Mexico City Airport Trust made a splash this week with its plans to become the first issuer of green bonds for airports. The Trust will sell the notes and transfer the funds to Grupo Aeroportuario de la Ciudad de Mexico – a state-owned firm that is undertaking the construction and operation of a new international airport in Mexico City, which it claims is one of the biggest infrastructure projects in the world. The airport is due to become operational in 2020. The list of eligible projects is quite broad, covering the construction of LEED-certified buildings that have – or will – achieve at least a 15% reduction in energy consumption compared with a benchmark; renewables and related infrastructure; projects “that enable energy performance monitoring and modelling”, “optimise the amount and timing of energy consumption and minimise peak loads” and “involve installation, maintenance or replacement of energy efficient heating, ventilation, air-conditioning, cooling, lighting and electrical equipment”.Water and wastewater management, pollution prevention and control, conservation and biodiversity are all included, too. The trust is still to secure a second-party opinion, according to insiders, but the transaction is expected next week, following a roadshow this week. If successful, the programme could hit up to $6bn of issuance over coming years.


It looks like EDF is readying itself for another transaction, as it extended its green bond framework this month to cover the modernisation and upgrade of French hydro assets, in addition to the construction of new wind and solar. The utility has already sold two mammoth green bonds – €1.4bn in 2013 and $1.25bn last year, both for solar and wind – and has now secured a new second-party opinion from Vigeo Eiris. A spokesperson told RI that “no specific operation [has been] announced”, but that EDF “released the new framework in order to provide investors the opportunity and time to review it”.

Swedish real estate company Castellum will roadshow its inaugural green bond in Stockholm and Gothenburg next week, ahead of an SEK-denominated, five-year deal. Proceeds will finance the development and acquisition of sustainable real estate, and retrofits to existing assets. Third-party certification under domestic and global systems such as BREEAM and Miljobyggnad will be required for projects under the bond, but it also has a second-party opinion from Sustainalytics. Castellum has committed to annual reporting, including some impact reporting.

In Spain, electricity utility Iberdrola has placed a €700m, nine-year green bond with a coupon of 0.375%. It claims this is the lowest rate the firm has ever obtained in a euro-denominated debt deal, with the final cost standing at 35 basis points below Spanish Treasuries. It added that the issuance – its third green bond so far – “was mainly placed among socially responsible investors”. The proceeds will be used to refinance onshore wind investments in the UK, and have been assessed by Vigeo Eiris.


The Nigerian government is reported to have held a stakeholder consultation on its plans to issue a green bond. No further details are known, but RI understands Kenya is also pursuing a sovereign green bond. That puts the two African countries in the running alongside France and Bangladesh to become the first sovereign issuer of a green bond. The UK, various Nordic countries and China are also said to be eyeing the possibility.