EIB taps 2019 Climate Awareness Bond for another EUR500m. Brings total 2014 green bond issuance to USD2.6bn

Bridget Boulle reporting

 

We've just heard that the European Investment Bank (EIB) is making a further EUR500 million ($690m) tap of its Climate Awareness Bond that matures in November 2019. The bond, which was first issued in July 2013, has now been tapped 5 times putting it EUR2 billion outstanding! The lead underwriters for this tap were: Credit Agricole, Citi, Morgan Stanley and RBC.

The word is that they were initially going for EUR250m but it closed at EUR500m.

There is certainly no sign of demand for green product slowing down, just last week EIB tapped its Swedish Kroner (SEK) denominated Climate Awareness bond for a further SEK900m.

You may be wondering why the EIB like to make multiple taps on the same bond (they did it with their SEK bond too). Our understanding is that as it's a long maturity bond it stays relevant for longer so making multiple taps helps to improve liquidity. Improved liquidity is a good thing for the green bonds market as many investors will not buy bonds that they cannot sell easily (i.e. illiquid bonds) thus restricting the market's growth.

This is the EIB's 4th Climate Awareness bond issue of 2014 totalling over US$1.7bn - over half of the total green bonds issuance for the year so far. 2014 issuance thus far stands at just under US$2.6bn which is well on track for our estimate in January of US$20bn for the year.

We're now thinking that issuance could be closer to US$40bn this year.