Weekly blog: Unibail-Rodamco €500m($530m) green bond is x6 oversubscribed! EXIM Bank of India’s green bond funds transport & renewables; Berlin Hyp issues the FIRST ever green pfandbrief; TfL to issue green bond + KfW will invest €1bn in green bonds!

Development Banks

EXIM Bank of India issues inaugural $500m green bond (5yr, 2.75%, BBB-/Baa3) to fund low-carbon transport, solar and wind projects

The Export-Import (EXIM) Bank of India issued an inaugural $500m green bond last month - the second green bond out of India and hot on the heels of Yes Bank’s INR10bn ($161m) green bond. EXIM’s green bond has 5-year tenor and offers a 2.75% coupon. It’s an investment grade issuance, with S&P and Moodys rating the bond BBB- and Baa3 respectively.  Bank of America Merrill Lynch and JP Morgan were the joint lead underwriters for the deal.

We dug around quite a bit to find out what the proceeds will be used for, and we’re very happy with what we found! Proceeds will be earmarked for low carbon transport, solar and wind projects (both new and existing projects), located mainly in Bangladesh and Sri Lanka. More specifically, the low carbon transport projects are focused on mass transportation of passengers and freight through rail and bus transit, with proceeds going towards the equipment, systems and infrastructure. For the solar and wind projects proceeds will go to energy generation and distribution.

Nicely done by EXIM Bank of India!

EIB continues to boost the green bond market by diversifying into different currencies: latest issuance for TRY 100m ($38.7m), 4yr, 8.5%, AAA

Market growth is not all about volume; it’s about diversity in issuance too. So, one way to support market growth is to issue green bonds in a range of currencies, providing liquidity and opportunity for investors in different countries. European Investment Bank has now issued their green bonds (aka Climate Awareness Bonds) in 10 different currencies and their latest green bond, TRY100m (USD 38.7m), supports the growth of a Turkish green bond market. The tenor is 4 years, with a 8.5% coupon and, as with all EIB’s bonds, it is rated AAA. Citi and Danske Bank were the lead underwriters on the deal.

World Bank issues their 5th Indian Rupee denominated green bond (INR100m) of 2015 in the Uridashi market (Japanese retail investors). 5yr, 4.6% coupon, AAA

The World Bank issued its fifth Indian Rupee green bond of the year specifically for Japanese retail investors in the Uridashi market. The INR110m ($1.8m) green bond has a 5-year tenor, coupon of 4.6% and was rated AAA, like all World Bank bonds, green and otherwise. The underwriter was Credit Suisse Japan.

It’s great to see the steady stream of Uridashi focused bonds coming out of World Bank – they are a sure-fired hit with the Japanese investors.


Unibail-Rodamco €500m ($530m) green bond oversubscribed by 6x! Tenor 10yr, 1% coupon, A (S&P)  + its green bond reporting is assured by EY!

The latest €500m ($530m) green bond from French real-estate giant Unibail-Rodamco is the company’s third green bond, after its inaugural issuance of €750m (US$800m) last February and its second (through subsidiary Rodamco-Sverige) in May, which totalled SEK 1.5bn (US$170m).  The most recent bond from Unibail-Rodamco has a tenor of 10 years, coupon of 1%, and is rated A by S&P. The bookrunners for the deal were Bank of America Merrill Lynch, Deutsch Bank, Natixis and Royal Bank of Canada.

So – how did it sell? Like hot cakes! The green bond was 6x oversubscribed. Now, we’d say that indicates there’s a lot of demand for green!

Unibail-Rodamco provided a public framework of eligible green assets for the 2014 green bond. Proceeds from the bond can finance green property that has gained a minimum BREAAM certification of  ‘Very Good’. Vigeo provided additional ESG criteria for the eligible assets but no second opinion on the green bond framework has been made public.

Reporting on the earlier green bond is available through the company’s 2014 CSR report (see pgs 107-110 of the report here). We are very pleased to see that EY has provided assurance on the allocation and management of proceeds (see pages 111-112) – Bravo! Assurance on reporting gives investors confidence that earmarked proceeds are actually being used to finance eligible green assets.

Unlabelled climate bond

Alpha Trains issued a €350m unlabelled climate bond as part of refinacing deal; 2.064%, 10 year, rated Baa2/BBB

German rail company Alpha Trains completed the first German whole business securitization deal totaling €1.5bn – of which was a €350m climate (unlabelled) bond. Tenor on the bond is 10 years and a coupon of 2.064%. The bond has a rating of Baa2/BBB. Bookrunners for the deal were Credit Agricole CIB and UBS.  

How green is it? Well – it’s all rail, so we say its all green. Simple as that! No emissions performance thresholds to worry about or anything. Why? Well, in relative terms, rail has so much lower CO2 emissions compared with other available transport that no matter what rail it is, it’s still way, way, waaaay more efficient that flying or driving.  Alpha Trains owns 271 passenger trains and 370 locomotives – so plenty of very green assets. Find out more about the Climate Bonds Transport Standard that dives deeper into what qualifies in the transport space, in addition to all rail, on our webpage.

Sustainability Bonds

€350m of FMO’s €500m ($534m) sustainability bond to finance climate projects

Earlier this week, the Bilateral Development Bank of the Netherlands, FMO, issued a €500m ($534m) sustainability bond; its second sustainability bond following the inaugural issuance in 2013. The bond has 7 year tenor and 0.125% coupon. The underwriters for the deal were Credit Agricole, HSBC, JP Morgan and Rabobank.

Although not technically a green bond, as proceeds split across both green and social projects, a closer look show FMO will use 350m, 70%, of the proceeds for green to climate mitigation projects! Shows that the green flavor of the bond market is cropping up in different parts of the thematic fixed income space.

The sustainability bond was a huge success, appealing especially to ESG-focused investors who comprised 73% of the order book. Clearly the granularity of disclosure showing the breakdown of green and social for the sustainability bond appealed to investors!

On the reporting side, FMO is also ticking the boxes. Sustainalytics provided an update last year on FMO’s 2013 sustainability bond, showing that the green part of the bond is going to a range of climate mitigation projects. Proceeds from the social part of the bond fund inclusion finance projects (e.g. microfinance lending) in developing countries.  Excellent work from FMO!

Market developments

KfW announced they will start buying green bonds, as well as issuing them  – and at scale! Initial commitment of a €1bn portfolio. Plus they want to buy ABS/project/corporate/lower rated GB to support market diversification

KfW, the German Development Bank, a recurring green bond issuer, will start buying green bonds as well, with an initial commitment to growing a €1bn green bond portfolio. According to KfW, they are looking to fill the portfolio with a mixture of green bonds supporting the market by purchasing green corporate bonds, project bonds, asset-backed securities and some non-investment grade green bonds. Wonderful! Growing the market is about creating this diversity of product, as well as continuing the growth in volume. KfW is providing a model for other development banks to follow complementing their work on the issuer side of the table by leading the way on the investor side in less established green bond product areas.

More from Germany: Berlin Hyp announces the first ever Green Pfandbrief (covered bond) globally! A breakthrough for the covered bond market!

Last year, we saw the first thematic covered bond come to market when Munich Hyp issued a EUR 300 million ($389m) sustainability covered bond with proceeds being used for a mixture of social and green projects. Now, Berlin Hyp is finally issuing the first fully green covered bond. Proceeds from the bond will finance the acquisition, construction and refurbishment of green buildings.

Oekom research AG assisted in developing the green bond framework. We’ll do a full review once the bond has closed – an exciting development and we’re looking forward to diving into the green credentials!

For those of you unfamiliar with the covered bond market and concept, covered bonds, or pfandbriefe as they are called in German, are debt securities that, in addition to being backed by the issuer’s balance sheet, are backed by the cash flows of a dedicated cover pool of assets, mortgages or public sector loans. The cover pool provides an extra layer of security for the investor, as in the event of a default, the bondholders have priority claims on the cover pool, above other unsecured bondholders, meaning they get first piece of the pie. It’s an exciting development because of the sheer size of the opportunity of the covered bond market: in Europe it is estimated to €2.6 trillion (US$2.8trn) outstanding!

Indian government encourages public sector agencies use green bonds to finance new renewable energy projects

After the exciting issuance from Yes bank and EXIM Bank of India, it looks like the Indian government have got a taste of green and wants more. A recent policy update means that Indian companies are now allowed by the state treasury to borrow in Rupees on the international markets (previously there was currency restrictions on borrowing in the domestic currencies). This development is perfectly in time with a message from central government to 8 key public sector agencies to do more on financing renewables through green bonds. Exciting developments!

Green Bond Gossip: Goldman Sachs asks for green bond standards, Rabobank GB event highlights the opportunity for agriculture to enter the market and Transport for London, Nordic Investment Bank and others are expected to issue green bonds soon!

At the annual Bloomberg New Energy Finance (BNEF) conference, held in New York this week, investment powerhouse Goldman Sachs’ Head of Environmental Markets Group said that: “ the green bond market needs stronger standards defining what projects qualify as environmentally friendly investments”. We couldn’t agree more.

Last week, Rabobank’s Green Bond event held in the beautiful Amsterdam Zoo, was an exciting opportunity for issuers, investors and intermediaries in Europe to come together to discuss the state of the green bond market and workshop how to help address potential hurdles to further growth in the coming year.  Mr Berry Marttin, Member of the Executive Board of Rabobank, urged the market actors to consider the issue of a potential global food crisis, stressed the opportunity for sustainable finance to be a tool to increase agricultural productivity. That includes green bonds, of course – we’ve convened experts to work on standards to enable agriculture and forestry projects to tap into the green bond market. And turns out that the former Prime Minister of the Netherlands Prof. Jan Peter Balkenende, also at the event, turned out to be a big fan of green bonds!

And finally, look out for these upcoming potential green bonds:

  • Transport for London (TfL), a public-private partnership, announced their inaugural green bond to finance green transport projects in the city. Proceeds will fund rail infrastructure, low emission bus and cycling improvements.  DNV GL is proving a second opinion.
  • Canada’s British Columbia has the potential to issue a green bond for future hydro projects, according to the Edmonton Journal.
  • Nordic Investment Bank may be coming out with its third green issuance, this time in Swedish Kroner (SEK). Its more recent green bonds have been USD and EUR denominated.
  • Expect more green bonds in the US municipal space – in particular it looks like the City of St Paul in Minnesota is setting up to do a $8.7m green bond in the next month.