TIAA among investors in new oversubscribed $1.5bn KfW green bond

KfW has come to market with its 10th green bond, in a $1.5bn that saw participation from Ikea and TIAA Global Asset Management, among others.

The German development bank issued the five-year bond last night, during what it described as “a short window of stability in an overall volatile market environment after the US election”. The deal is understood to have been upsized on the back of investor demand, which reached $1.7bn.

The average ticket size was $30m, from more than 50 investors, and the spread was tightened to 30 basis points above midswaps, giving it a final price of 99.749%. The coupon was 2%.

The lion’s share of the bond was taken up by banks (36%), while half was bought by central banks (26%) and asset managers (24%). The remaining 14% went to insurance and pension funds, and ‘other’ investors.The USD-denominated deal inevitably saw big uptake from investors out of the Americas, who bought 35%, but was closely followed by participation from Europe (34%) and Asia (28%).

Lead managers on the deal were Bank of America Merrill Lynch, Goldman Sacks and Societe Generale. The bond will be listed on the Luxembourg stock exchange.

A second opinion on KfW’s green bond framework has been provided by Cicero.

KfW first came to market with a green bond in 2014, launching its ‘Made by KfW’ green bond programme. It has now issued 10 bonds – plus one second tap of an existing bond – amounting to a total of €9.2bn equivalent, across Australian dollars, US dollars, sterling, Euro and SEK. €2.81bn of this has been issued this year, from four transactions. Link