Draft EU Taxonomy standards threatens to stymie green bond issuance to finance green buildings by limiting eligibility to those with EPC A labels, with one pioneering covered bond issuer floating a switch to KPI-linked bonds, although there are suggestions the Commission may be open to compromise.
The Federal Republic of Germany took the green bond market to a new level on 2 September with the launch of its first green Bund. Ahead of Germany’s first green bond auction on 4 November, Deutsche Finanzagentur co-CEO Dr Tammo Diemer discussed with Sustainabonds’ Neil Day its twin bond concept, how the pandemic has affected its activity, and the arrival of the EU in the sustainable bond market.
A building’s energy efficiency has a negative and highly significant correlation with the risk of mortgage default, according to an Energy Efficient Mortgage Initiative (EEMI) study, which it says is the fullest analysis of the subject and a timely finding as the European Commission sets out its post-Covid-19 agenda.
Berlin Hyp achieved the highest bid-to-cover ratio of any German Pfandbrief this year on Tuesday when it reopened the post-summer covered bond market with its 10th benchmark green bond, a €500m 10 year deal launched in the wake of “ambitious” new sustainability targets, and followed it up with a Swiss franc debut on Thursday.
De Volksbank issued the first green Tier 2 issue from a European bank on 15 July, a €500m 10.25 non-call 5.25 transaction that was almost four times oversubscribed and priced through fair value, as the issuer aligns its funding with its strategy of being climate-neutral by 2030.
Sparebanken Vest Boligkreditt’s “360 degree” sustainability strategy was cited as helping attract investors to the Norwegian’s €500m seven year debut green covered bond on Wednesday (1 July), which was priced with a lower new issue premium than recent supply in the asset class.
Deutsche Bank entered the green bond market on Tuesday as part of a push towards a recently-announced €200bn sustainability target, with a €500m six year non-call five senior preferred deal that achieved a €4.5bn-plus book and pricing inside fair value, global head of issuance and securitisation Jonathan Blake told Sustainabonds.
Norway’s SpareBank 1 Boligkreditt sold the largest ever green covered bond new issue in the Swedish market yesterday (Tuesday), a SEK7.5bn five year FRN made feasible by the QE-inspired strength of the krona market and the attraction of the green element, which contributed to a SEK9bn-plus order book.
Interest in the energy transition purpose of a €1.25bn 10 year debut green covered bond helped France’s BPCE achieve the biggest book on a euro benchmark covered bond since 2013 on Tuesday, according to an official at the issuer, allowing it to achieve “more normalised” pricing amid the crisis-hit market backdrop.
In June 2019, PKO Bank Hipoteczny issued the first green covered bond from central and eastern Europe, and has since followed up with a second deal as well as the launch of an energy efficient residential mortgage offer. Five years on from its creation, CEO Paulina Strugała tells Sustainabonds about the latest developments related to its green covered bond activity.