This week Dutch transmission grid corporate TenneT broke this year’s record for largest green bond issuance with an impressive EUR1bn deal. ABN Amro (EUR$500m) and ANZ Bank (A$600m) issued very successful Certified Climate Bonds (blogged separately); the first green bond from Eastern Europe was issued by Nelja Energia; and Belgian waste company Shanks Group also came to market with a EUR150m ($167m) green retail bond.
As always, there is green bond gossip as well: the City of Los Angeles will issue a Green City Bond to fund water projects, and Latvia’s first ever green bond is on roadshow from Latvenergo. The rating giant Moody’s also published a comprehensive green bond report, and Euromoney is asking people to do their green bond survey.
Corporate green bonds
TenneT Holdings issues EUR1bn ($1.1bn) (two tranches of 6yr, A3/A-, 0.875% and 12yr, A3/A-) and is a success with 2x oversubscription!
The record for largest green bond issuance in 2015 was broken by Dutch transmission grid corporate TenneT Holdings B.V. who issued a huge EUR1bn ($1.1bn) green bond this week. The deal is split into two tranches of EUR500m ($549m); one with 6-year tenor and 0.875% coupon, and the second with a longer 12-year tenor and 1.75% coupon. The bonds were rated A3 and AA- from Moody’s and S&P respectively. The lead underwriters for the deal were HSBC, ING and RBS.
Despite being the massive size of the bond, investors’ demand still outstripped demand by a mile – the order book ended with EUR2 billion of orders! One of the investors in the deal was KfW, who recently announced a EUR1bn green bond portfolio that will cover a range of currencies and credit profiles.
Proceeds from the bond are earmarked for transmission convertor stations and cables to connect offshore wind projects in Netherlands and Germany to the main land grid. Being wind power infrastructure projects this also aligns with the Climate Bonds Wind Standard. Oekom provides a second opinion on the bond.
TenneT has committed to annual reporting on the allocation of proceeds to eligible green projects and other environmental impact indicators. But, that said, as it’s for qualifying wind transmission infrastructure projects all we want is confirmation the proceeds have been allocated..
Brazilian food company BRF has closed its inaugural EUR500m ($545m) green bond, BBB 2.75% for 7 years – what a fabulous interest rate!
The issue is BRF’s first Eurobond – and they made it green! BRF is rated BBB by S&P. The bond has a 2.75% coupon and 7-year tenor. More details on the green credentials of the use of proceeds and insight into the Sustainalytics second opinion will be in next week’s blog - so stay tuned.
Nelja Energia issues the first Eastern Europe green bond for renewable energy projects in Latvia and Lithuania (EUR50m ($55m), 6yr, EURIBOR + 65bps, N/R)
Estonian energy company Nelja Energia AS issued its inaugural green bond for EUR 50m ($55m). Although modest in size, it’s exciting to see the first corporate green bond from Eastern Europe! The bond has 6-year tenor, and a semi-annual floating coupon at EURIBOR+65bps, but no rating, as it’s from a small issuer and for a relatively small amount. The bond will be listed on the Oslo Stock Exchange, who announced their dedicated green bond list in January this year. Swedbank was the sole underwriter for the deal. DNV GL provided a second opinion on the green credentials of the bond.
Institutional investors from Scandinavia, the Baltics and United Kingdom were the main subscribers of the bond.
Proceeds are earmarked for renewable energy projects in Latvia and Lithuania. Nelja Energia only generates electricity from wind, solar, biomass and hydro. Currently its asset base is mainly onshore wind power with some onshore wind and biomass power plants. The company is majority owned (77%) by Vardar Eurus, a subsidiary of the Norwegian power company Vardar that issued their own green bond in 2014.
We hope to see more green bonds from Eastern Europe in the coming months!
Retail green bond from UK corporate Shanks Group PLC finances waste, recycling, waste to energy and waste collection vehicles (EUR150m ($165m), 7yr, 3.65%, N/R)
UK waste-to-product corporate Shanks Group issues a EUR150m green bond for retail investors in Belgium and Luxembourg. The green offering has a 7-year tenor and fixed coupon of 3.65%, and is not rated. BNP Paribas and KBC Bank were the joint underwriters. Prospectus is here.
Sustainalytics (who have recently become an approved verifier of the Climate Standard, by the way!) provided a second opinion on the bond’s adherence to the Green Bond Principles.
Proceeds from the bond can finance five eligible project types:
- Recycling solid waste into reusable products
- Treatment of hazardous waste (contaminated water/soil)
- Organic waste treatment
- Recycling and waste management
- Reducing emissions for waste transportation
Shanks provides some disclosure on specific projects that will be financed with the green bond proceeds, highlighting several recycling management and organic waste treatment projects across the UK.
ANZ Bank woke up the Australian markets with its A$600m ($464m) with a Certified Climate Bond to finance green property + renewables. Read the separate blog here.
ABN Amro’s Certified Climate Bonds was upsized from EUR350m ($384m) to a EUR500m ($549m) after incredible investor demand at the roadshow. Read the separate blog here.
Market Developments
Moody’s launch report: “Green Bonds Start to Bloom”
In the report, “Green Bonds Start to Bloom”, the rating giant says they expect more diversity in issuers, maturities, currencies and bond features and the market continues to grow, and also highlights the need for issuers to improve the use of standards and accountability to improve the credibility of the green credentials with investors.
Goldman Sachs green bonds and a $1bn target for Japanese renewables
Goldman Sachs plans to use green bonds to attract $1bn investment in renewable energy projects in Japan. Through the Japan Renewable Energy, an entity Goldmans established in 2012, the investment bank seeks to issue investment grade securitised debt. Great to get some funding to the Japanese energy market that needs to diversify away from nuclear and great for investors looking to invest in green bonds! Win-win.
Green Bond Gossip
The City of Los Angeles (LA) plans to issue a $182.7m green bond for municipal wastewater treatment projects + air quality projects
According to the preliminary prospectus, proceeds will be used for wastewater collection and pumping facilities, water recycling projects and air quality projects. We hope there will be a second opinion on the green credentials of the bond, as water projects can be a tricky area from an environmental perspective. .
First Latvian green bond in the market now
Latvenergo is in the market this with a proposed green bond to finance environmentally friendly projects. They’re aiming for EUR100m. Underwriter is SEB A second opinion from CICERO has already been published.
With Estonia’s Nelja Energia out last week (see above) it really is go go go in the Baltics!
Take the EuroMoney green bonds survey
And finally, as we know you are all interested in this exciting green bonds market – here is a chance to express your view – EuroMoney are conducting a short but sweet survey on everything green bonds – get involved! Take their quick Green Bond survey now.
Our blogs are written by a team: Sean Kidney, Tess Olsen-Rong, Beate Sonerud, Kazutaka Kuroda, Rozalia Walencik, Justine Leigh-Bell and Katie House.
