MKT Update: 3x 1bn SEK green bonds (EIB, NIB & KfW) quench Swedish thirst, China’s GBs start rolling, Ontario’s 2nd GB, unlabelled $978m wind, SolarCity ABS + gossip!

Development Bank

First green bond of 2016 goes to EIB’s EUR500m tap of 2023 - Climate Awareness Bond (7yr, 0.5%, AAA)

The world’s largest green bond issuer, the European Investment Bank (EIB), is the first to issue a green bond in 2016 with a EUR 500m tap of its 2023 green bond, first issued in August 2015. The tap takes the total issuance for the bond to EUR 1.5bn. Lead underwriters for the tap were BAML, Commerzbank, Credit Agricole CIB, DZ Bank, Rabobank and Unicredit. 

The green bond (called a Climate Awareness Bond by EIB) has a 0.5% coupon and is rated AAA. Proceeds finance renewable energy and energy efficiency projects . As with all EIB green bonds, there is no second review; however, “impact reporting” on previous green bonds provides extensive detail on the allocation of proceeds and KPMG provides assurance on allocation.

A key investor in the deal was Credit Agricole, which in November 2015 publicly committed to investing EUR2bn in sustainability, green or social focused bonds. 


EIB, NIB and KfW all issue SEK1bn ($116m) green bonds to meet ever-increasing Swedish investor demand (5yr, coupon 0.625% or 0.5%, AAA)

Three is a charm! EIB, Nordic Investment Bank (NIB) and KfW, all long-standing green bond issuers, all hit the market in recent weeks with issuance of SEK1bn green bonds. First came the EIB and NIB shortly followed by KfW. All three of the green bonds are SEK1bn bonds with 5-year tenor and triple-A rating, EIB’s and NIB’s green SEK green bonds both have 0.625% coupon whereas KfW’s equivalent has a 0.5% coupon. 

SEB was the sole underwriter for both the EIB and NIB deals. SEB and Nordea were the joint underwriters for the KfW deal. 

It’s no surprise that there is a lot of interest in SEK-denominated green bonds. Swedish investors were amongst the early pioneers of the green bond market and they have a huge appetite to fill fixed income portfolios with green, particularly in local currency.

The investors are also getting premium green for their Swedish krona as all of the issuers have mature green bond programs. To recap:


Unlabelled climate-aligned bonds


Securitisation pioneer SolarCity issues investment grade $185m securitisation of distributed solar loans  (6yr, coupon 5.17%, BBB).

This is the fifth solar securitisation from US retail solar company SolarCity. The latest deal differs from previous ABS from SolarCity, as it is a securitisation of solar loan contracts rather than solar panel leases, which has backed the other ABS issuances from the company.

Excitingly, it is the first time such solar loans achieved an investment grade rating with S&P and Kroll both rating the pool of loans as BBB. This means SolarCity can get a lower cost of capital when refinancing the deal. The ABS issuance was a private placement and Credit Suisse was the sole arranger/bookrunner.


WindMW issues EUR 978m ($1bn) project bonds for North Sea wind (1 yr & 6 yr, 2.125-5.02% coupon BBB-)

Blackstone-owned WindMW issued a whopping EUR 978m (that’s over $1bn!) in wind project bonds. The deal was split into 8 tranches with maturities in 2017 and 2021. One of the seven tranches was issued in USD ($438.5m) and the remaining were EURO denominated bonds. S&P rated the deal as BBB-.

Blackstone and Windland Energieerzeugungs completed the build of the 288MW North Sea wind farm off the coast of Germany in April 2014. Despite only being operational for a year, in December 2015 the partners were able to refinance the EUR850m bank finance used to make the initial investment through this project bond and achieve better terms.  This is exactly the role of bonds in the capital pipeline - as a refinancing tool that frees up capital to invest in new projects. To better focus risk capital on project development, it’s important that we see a larger and healthier market for bonds where proceeds go to refinancing.

Development bank

IREDA’s unlabelled climate-aligned bonds go down a storm with Indian institutional and retail investors (Rs 1,716 crore ($260m), 10-20yr, 7.53-7.68%)

IREDA, India’s renewable energy development bank, has issued an unlabelled climate-aligned bond for Rs 1,716 crore ($260m). The issuance was almost three times oversubscribed – that is very cool indeed! The deal was open to both retail and institutional investors, with the retail investors taking Rs 686 cores ($103m) in total. Retail investors tax free 10-year notes have a coupon of 7.53, the 15-year notes have 7.74% coupon and the 20-year notes have 7.68% coupon.

We include IREDA’s bond in our unlabelled climate-aligned universe, as we consider the entity as a pure-play - meaning all of its business sits within the CBI definitions of green: IREDA finances only renewable energy projects such as wind, hydro, biomass, energy efficiency and conservation, solar and waste-to-energy. Its latest tax-free bond issue is therefore considered as climate-aligned. 


Market Developments

China: the green dragon is properly awakening in 2016

China Industrial Bank (CIB) issued a green ABS deal earlier this month. Now, just this week two more huge green bonds have been issued in China: RMB 10bn, $1.5bn, from CIB and a whopping RMB 20bn, that's $3.5bn – which is the largest ever Asian green bond deal, from Shanghai Pudong Development Bank (SPD).A further green corporate bond is due to be issued by Beijing Jingneng Clean Energy RMB 1bn ($151m), – since it’s a corporate green bond it doesn’t require PBoC approval to label as green.

For more details on these bonds check out our China Market Update Blog.

SEBI launch green bond guidelines for Indian market; check out full details on our earlier blog.

A ‘UK Green Finance Initiative’ has been launched by the City of London, in partnership with the UNEP Inquiry into the Design of a Sustainable Finacial System. The Initiative focuses on three issues: improving the flow of projects for UK green bonds, enhancing transparency and accreditation of standards, and informing and incentivising the green bond market. The launch included the release of a UNEP Inquiry report launch ‘The United Kingdom: Global Hub Local Dynamics” that shows London’s potential as a green finance hub. (The Inquiry is a Climate Bonds Partner.)

Staying in London, India’s first green bond issuer YES Bank is planning to list its latest green bond on LSE a boost for the exchange green bond list.

Green Bond Pioneer Awards will be held for the first time next Wednesday at the London Stock Exchange – yes, that’s the Climate Bonds Initiative Awards! There’s still time to register for the seminar and main event, but be quick. 

Moody’s requests feedback on its new green bond rating methodology by 12 February 2016.  The green bond rating focuses on the transparency and adherence to best practice guidelines  of green bonds rather than making a judgement on green. Moody's the first of the credit rating firms to dip their toes into green ratings, though work has been done by Michael Wilkins at S&P to integrate green and climate risk into mainstream ratings.  


Green Bond Gossip

As promised, Ontario hits the green bond market for a 2nd time!

The Canadian Province of Ontario is posed to close its second green bond offering this time round a larger CA$750m (US$532m). Its first green bond issued in 2014 under the same framework, which gained a second review from CICERO, used proceeds primarily for the Eglinton Crosstown rail link.

A side note: legals for the deal were done by Shearman & Sterling, long-time pro bono lawyers for Climate Bonds.

First ever-Irish green bond from Gaelectric opens for retail investors. The bond is due to close in March.

Bangladesh Bank is planning its own green bond, according to Environmental Finance. The green bond would be the first from the bank and for the country/Bangladesh. The announcement comes hot on the heels of Bangladesh Bank committing to invest in green bonds. Great work!