German development bank KfW considers issuing green bonds in currencies other than euro or dollar

Leading green bond issuer looks to broaden its investor base

German development bank KfW, which last year became the world’s biggest issuer of so-called green bonds with a volume of close to €3bn, is considering offering the bonds in currencies other than US dollar or euro.

Speaking at a press conference in Frankfurt on Wednesday (February 4), Günther Bräunig, the KfW’s Chief Capital Markets Executive, reaffirmed the bank’s intention to issue about the same volume of green bonds this year as last. “This year, however, we can imagine issuing our green bonds in currencies other than the euro or US dollar.”

RI understands one example could be the Australian dollar, though it is being stressed that nothing had been decided yet. Denominating its green bond in Australian dollars would enable the KfW to reach responsible Australian investors like the A$104.8bn (€70.7bn) Future Fund, Hesta, the $A29bn superannuation fund, or VicSuper, the $13bn scheme.

The bank issued its inaugural green bond last July with a volume of €1.5bn. Three months later, it followed up with a US dollar-denominated green bond whose volume was $1.5bn (€1.3bn).Some of the world’s biggest responsible investors, including AP4 of Sweden as well as CalSTRS, TIAACREF and BlackRock of the US, were among the subscribers to KfW’s US dollar-denominated bond.

KfW green bonds have a maturity of five years and are rated triple ‘A’. The one in October paid a coupon, or interest rate, of 1.75%. With the proceeds from the two sales, the bank finances environment and climate protection projects around Europe. The bonds are assured by Norway-based CICERO (Centre for International Climate and Research – Oslo).

Including green bond issuance, the KfW is the world’s biggest financier of projects aimed at protecting the climate and environment. Of the €74.1bn in new finance that it provided last year, 36% went to renewable and energy efficiency projects as well as green renovation of buildings. As a result of these activities, Norbert Kloppenburg, KfW Management Board Member with responsibility for foreign operations, calculated that the bank saved around 10m tonnes of carbon dioxide (CO2) each year. “That’s the equivalent of what a country like Luxembourg emits,” Kloppenburg told the press conference.