Mirova, AP4 and Sarasin among investors for new KfW’s £500m ‘British’ green bond

Barclays is both book runner and investor in the issue

Responsible investment stalwarts Mirova of France, AP4 of Sweden as well as Sarasin Investment UK were among the subscribers to German development bank KfW’s latest green bond – a £500m (€700m) issue due in 2020.

“By successfully issuing its first green bond in pounds sterling, the KfW expanded its presence in the green bond market. The transaction attracted great demand which enabled us to achieve a £500m deal size and to continue providing liquidity to the green bond market,” the German development bank said in a backgrounder on the issuance, which happened on Friday (July 24).

Book runners for the green bond were UK banks Barclays, HSBC and the Royal Bank of Scotland. Barclays was also one of the almost 30 investors in the bond, along with asset management firms Alliance Trust, Northern Trust and Vanguard. Rated triple ‘A,’ the KfW bond pays a coupon, or interest rate, of 1.67% per annum and is traded on Luxembourg’s financial exchange.Said Christopher Wigley, Senior Portfolio Manager at Mirova: “We are impressed with the KfW’s commitment to the green bond market, their linked renewable energy programme and green impact. With only about 7% of the market being in pounds sterling, we believe that the KfW’s issue is a major contribution to the growing market.”

Added Stephen McDowell, Managing Director at Barclays’ Treasury: “We are very supportive of the KfW’s rigorous environmental framework.” It helps towards its target of holding £1bn into green bonds by November.

With the proceeds from its latest green bond, the fourth in just the last year, Frankfurt-based KfW finances environment and climate protection projects like wind and solar parks around Europe. The bonds are assured by Norway-based CICERO (Centre for International Climate and Research – Oslo). The bank’s previous green bond issuances included one in euros in July 2014 (volume €1.5bn); one in US-dollars in October 2014 (volume: $1.5bn or €1.35bn); and one in Australian dollars late last March (A$600m or €395m). Link.