For those non-bankers among you, over-subscription means getting more orders than you can fill - in the case of most climate and green bonds this year, way more.
Kommunalbanken (KBN) had USD840 million of orders from over 40 investors, 58% of which were "socially responsible investment (SRI) portfolios". Given the number of times central banks appearing on green bond buyer lists (see below), everyone's turning into an SRI buyer nowadays. And that's the way it should be.
Last week we blogged that SolarCity and Credit Suisse were about to issue a new $54.4 million, climate bond – a rooftop solar lease securitization. It’s out: BBB+, 4.8%, 13 years. The long tenor is interesting – and great. And S&P’s BBB+ rating suggest those credit analysts may be beginning to understand solar.
This bond has been long-awaited by the green finance sector, who are hoping it’s the harbinger of things to come.
I've just arrived in Warsaw for a round of climate finance meetings and talks alongside this year's UN Climate Negotiations (COP19); I'll be reporting. But the first thing I have to report is not about the Conference, but about the Host: the Polish Government.
The Host Government is meant to lead the negotiations. But unfortunately Poland would seem to be doing exactly the reverse. Apart from what's going on inside the negotiations (and remember Poland has been blocking tightening of the EU's emission targets), contemplate these:
There has been a bit of interest recently about rapidly expanding options for retail investors to get involved in renewable energy projects. While we still see retail bonds as making a relatively modest contribution to the transition to a low carbon economy, they are important in engaging the public and creating awareness for green thematic investments which can only be good.
Here’s a round up of some of the activity going on in the retail bond market (please note, this is not an endorsement of and product’s credit characteristics, only their environmental ones)...
Good Energy bond 3x oversubscribed
Electricité de France (EDF) is planning a Euro bond linked to their renewable energy assets. They’ve mandated Morgan Stanley and Credit Agricole CIB to arrange a series of investor meetings in Europe over the coming week. No word yet on size. EDF is rated A+/Aa3/A+ (Stable/Neg/Neg) by S&P/Moody's/Fitch.
It seems that EDF have been convinced that self-certification will not fly (hallelujiah), so project eligibility and selection criteria has been reviewed by ESG analysts Vigeo, who did the big Air Liquide bond. Tracking and reporting of disbursements will also be audited by an independent third party – a good development.
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Earlier this week we blogged the issuance of IFC's second $1 billion green bond. IFC's press release about the bond says it "was heavily over-subscribed". IFC vice president and treasurer Jingdong Hua told Environmental Finance. “We had a pretty large book – well over $1.5 billion – and we were able to tighten the pricing. Demand remains strong.”
Kommunalbanken is the Norwegian Government's AAA-rated local government funding agency.
Earlier this week a small announcement appeared that Citi, SEB, Bank of America Merrill Lynch and Morgan Stanley had been mandated to underwrite a debut public US Dollar green bond.
We've heard target issuance is $500 million. We're expecting the bond to come out next week.
FMO yesterday issued a EUR500m, 5 year, “sustainability bond”. FMO's credit rating- and the bonds - is AAA (negative outlook) from S&P. The coupon (interest rate) was 15 basis points above "mid-swaps".
FMO is the EUR6.3 billion Bilateral Development Bank of the Netherlands. It’s an interesting beast, 51% owned by the Dutch Government, with the rest owned by the big three Dutch banks and a small slice by trade unions, employer associations and motley others.
Lead managers were Rabobank (an FMO shareholder), Credit Agricole CIB and JP Morgan.
According to Reuters. the IFC is today pricing their second $1 billion green bond. Coupon is 0.625% (4 basis points over US Treasury bonds).
Lead managers are SEB, Credit Agricole CIB, Citi and Bank of America Merrill Lynch.
