BNP Paribas “pushed all the right buttons” with the first green senior non-preferred bond on Tuesday, a EUR500m six year deal that attracted some EUR1.1bn of orders, offering an in-demand maturity and ultimately pricing with what was deemed to be an impressively small premium.
Other banking groups have sold green bonds in HoldCo or other formats that are aimed at being eligible towards TLAC and MREL buffers, but the French bank’s is the first green bond within a specific senior non-preferred framework.
BNP Paribas announced on Monday that it had mandated itself as sole bookrunner and Danske Bank, SEB and Swedbank as joint lead managers for the euro benchmark green senior non-preferred transaction.
The six year deal was launched on Tuesday morning with initial price thoughts of the 65bp over mid-swaps area. Guidance was then set at 55bp-60bp, will price within range, with books over EUR1bn, before the spread was fixed at 55bp for a size of EUR500m, with final books at around EUR1.1.bn. The size was later fixed at EUR500m.
Syndicate bankers at and away from the leads said the deal offered as little as 3bp of new issue premium, based on the issuer’s senior curve, which he said was notably small for a senior transaction, especially when compared to the premiums being paid on the same day for secured bonds in the form of non-green covered bonds for HSBC, Erste and Axa Bank Europe.
The deal was issued on the same day as a EUR500m 10 year green senior unsecured bond for Berlin Hyp. The German bank’s book was last reported in excess of EUR500m, and the spread was set in the middle of guidance at 60bp.
Syndicate bankers attributed the greater demand for BNP Paribas’ deal to its intermediate maturity, which they noted is more popular among investors in the difficult market environment, and its more attractive price, with the French senior market offering greater spread than the German market.
“With the green factor and the six year maturity, this deal was pushing all the right buttons,” said a syndicate banker away from the leads.
The new issue is the French bank’s second green bond, following a EUR500m long five year debut in senior unsecured format in November 2016, when the use of proceeds was renewable energy loans.
The proceeds of the new issue will be used to finance renewable energy and mass and public transportation projects.
Cecile Moitry, sustainable finance director at BNP Paribas, told Sustainabonds that no major changes had been made to BNP Paribas’ green bond framework since its last issue, for example on eligible sectors and asset selection, but that some updates had been made to reflect changes to the bank’s Corporate Social Responsibility (CSR) policies.
“The logic of the framework was to be very transparent as to what we consider to be eligible for the green bonds of BNP Paribas,” she added.