Gothenburg breaks ground with $77m Swedish Green Muni / German AAA Rentenbank $50m climate bond / NYSERDA $24.3m resi EE climate bond / Green Bond Underwriters league: BoAML up to #2

The Green Muni GO crosses the Atlantic, from Massachusetts to Sweden

On Friday Sweden's Gothenburg became the first Nordic city to enter the climate bonds space, closing a SEK500m ($77m), 6 year green bond to fund public transport, water management, energy and waste management projects. The bond is part of a potential SEK 2 billion green bond programme for such projects in Gothenburg. The bond carries Gothenburg’s AA+ and Aaa ratings from S&P and Moody’s.

The bond was several times oversubscribed according to lead manager SEB, which meant that the book had to be closed early.

The bond is a "use-of-proceeds" bond, modelled on those from the European Investment Bank and the World Bank, where proceeds are earmarked for environmental projects but returns and risk are backed by the issuer’s full balance sheet. Massachusetts did a similar General Obligation (GO) bond a few months ago; expect to see a lot more of these in the coming year.

First climate bond from Retenbank

Germany’s development agency for agribusiness Retenbank recently issued its first use-of-proceeds climate bond, with proceeds going towards renewable energy, such as solar and biogas. Retenbank's solar and biogas loan portfolio totalled EUR1.4bn in 2012 and EUR2.5bn in 2013. The 7 year, AAA rated, €50m use-of-proceeds bond is a plain vanilla corporate bondRabobank acted as the sole bookrunner; coupon was 1.455%. This is the 6th sustainability-related bond that Rabobank has arranged in 2013.

NYSERDA issues Qualified Energy Conservation Bonds AAA muni bonds

The New York State Energy Research and Development Authority (NYSERDA) recently announced that it had raised $24.3m in its first revenue bond to finance loans for residential energy efficiency improvements as part of the Qualified Energy Conservation Bonds program. Bonds have an average term of 6.8 years and interest rate of 3.21%.

The bond was rated AAA/Aaa by S&P and Moody’s based on a guarantee from a NY  State Environmental Facilities Corporation State Revolving Fund. The right to use guarantees from the Fund for energy efficiency bonds, when it had been restricted to use for water and waste bonds, was won by New York State earlier this year from the US Environmental Protection Agency. According to NYSERDA Treasurer Jeff Pitkin, this is the first time an agency has used clean water mandates to support energy efficiency bonds.

The bond program is an initiatives of NYSERDA’s new NY Green Bank. The goal of the Green Bank is to “alleviate financial market barriers that currently impede the flow of private capital to clean energy projects.

BoAML jumps to No 2 in Green Bond Underwriters League Table

We had JP Morgan in the No 2 "labelled green bond underwriters" spot in our Thursday blog item, but a closer check shows we should have said Bank of America Merrill Lynch, with JPM in third spot. Check the updated blog here. Gossip has it that JPM is shooting for No.1 spot over the next 12 months. Watch out SEB and Christopher Flensborg!