Fund managers make up lion’s share of buyers for first Sterling green bond

Unilever’s Green Sustainability Bond 3x oversubscribed in three hours.

Fund managers were the big buyers in the UK’s first Sterling denominated green bond issued by Unilever, the food to home-care products company, according to statistics from Morgan Stanley, a bookrunner for the four-year, £250m (€299.6m) “Green Sustainability Bond”. Asset managers took 59% of the issue, while pension funds and insurance companies bought 18%. Central banks and supranationals were the other big buyers taking 14%. In terms of geography, UK buyers accounted for 59% with Swiss investors taking 15%, Nordic investors picking up 12% and German and Austrian investors buying 7%. The Unilever green bond, the first by a company in the FMCG sector, is a 2% per cent fixed rate note due on 19 December 2018. The notes are issued by Unilever PLC and guaranteed by Unilever N.V. and Unilever United States, Inc.
The Climate Bonds Initiative, a lobby group for the promotion of green bonds, reported that the bond was more than three times oversubscribed within three hours and said that a number of first-time buyers of Unilever bonds were attracted by the green financing aspect of the paper.The proceeds of the bond will be invested in Unilever projects including a laundry liquid detergent factory in South Africa and ‘lean & green freezer’ cabinets projects in Turkey, Russia and the US. Unilever has worked with DNV GL, the environmental and certification consultancy, to develop its own Green Sustainability Bond framework based on the Green Bond Principles, a set of voluntary guidelines endorsed by investment banks. It said the framework was based on the company’s Sustainable Living Plan and includes a set of clearly defined reduction criteria for GHG emissions, water use and waste disposal for the projects selected. Reductions in CO2 emissions for the bond proceeds aims to be 50% for new factories and 30% for retrofitted factories, with similar targets in water and waste. The framework includes a yearly reporting structure for full traceability of the funds.
Jean Marc Huet, Unilever’s Chief Financial Officer, said: “We have a clearly defined ambition in Unilever, articulated by our Sustainable Living Plan. By issuing our first Green Sustainability Bond, our intention is to invite investors to support our vision for sustainable growth, while investing in the Unilever credit.”