First day of COP23; first green bond from a UK bank, financing and refinancing green residential mortgages
What’s it all about?
UK based Barclays PLC has just announced successful pricing of a EUR500m green bond. Proceeds will be used to finance and refinance mortgages on residential mortgages on properties in England and Wales based on the overall carbon intensity of the underlying property. Demand reached EUR1.85bn, a 3.7x level of oversubscription.
The bond aligns with their Green Bond Framework and has received Certification under the Low Carbon Buildings Criteria of the Climate Bonds Standard using the regional certification criteria. Carbon Trust served as the Verifier and also provided a second opinion.
All up, an example of international best practice in green issuance.
Who’s Saying What?
Tushar Morzaria, Group Finance Director, Barclays
“This issuance is an exciting step and complements Barclays’ existing involvement in the well-established green bond market. It will help us diversify our investor base, attracting interest from the growing group of environmental, social and governance (ESG) investors."
"Today’s announcement also reflects the efforts of our Green Banking Council, which is committed to the development of innovative products and services that support our clients and customers in their transition towards a low carbon and sustainable future.”
Claire Perry MP, Minister of State for Climate Change and Industry
“The Government recognises the potential for the UK to cement its position as a global hub for investment in clean growth, and this is why we set up the Green Finance Taskforce with Barclays as a member."
"Today’s announcement is an exciting moment for the UK market in demonstrating global leadership in the green finance sector and it’s great to see the first green bond for the UK market, using UK assets.”
Sean Kidney, CEO of Climate Bonds Initiative
“Barclays has taken a lead among UK banks and FTSE 100 companies with this innovative Certified green bond that is an example of international best practice standards."
"The UK green bond market has been slow to develop, lagging many G20 and EU nations. This new Barclays green bond should trigger more global banks and FTSE companies to act and initiate their own green bond programs into 2018.”
The Last Word
We’ve lamented the lack of domestic green bonds emanating from the UK. EU nations, emerging economies, Canada and Australia appear in our top ten green bond issuing nations from 2005 to June 2017. One prominent country doesn’t.
In our previous October Market Blog analysing the record SSE issuance we again asked “where are the UK corporates” noting that they (SSE) and privately owned Anglian Water stood alone as recent UK green issuers.
Barclays has in part answered that question with an issuance that should help open up the domestic market for green mortgages and provide some impetus for those FTSE companies still dragging their feet.
A €500m green bond is the perfect way to end the first day of COP23.
‘Till next time
Climate Bonds
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