Berlin Hyp became the first bank to issue a sustainability-linked bond (SLB) on Tuesday, 13 April, with a €500m 10 year senior preferred deal. Bodo Winkler-Viti, Berlin Hyp’s head of funding and investor relations, discussed with Sustainabonds’ Neil Day the pioneering first issue, the rationale for adopting the new instrument and the bank’s choice of metrics, and how SLBs fit in with its green bond issuance.
Berlin Hyp became the first bank to sell a sustainability-linked bond (SLB) yesterday (Tuesday), issuing a €500m 10 year senior preferred bond with a coupon step-up should it not hit a carbon reduction target, in a “courageous” move that met with dedicated investor interest and achieved tight pricing.
Berlin Hyp is set to become the first bank to launch a sustainability-linked bond next week, a 10 year senior preferred issue tied to a sustainability performance target of a 40% reduction in the carbon intensity of buildings financed by its loan portfolio.
A lack of data and confusion over standards could thwart EU Taxonomy-compliant green bonds with commercial real estate as their use of proceeds, according to speakers in a Berlin Hyp-CBI event, but the ambition of the European initiative was welcomed.
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.
Berlin Hyp has opened up its green bond issuance to private placements ahead of the fifth anniversary of the launch of its pioneering green Pfandbrief today (Monday), with the German issuer having hit one year ahead of schedule a target of 20% of its lending being green by the end of 2020.
Berlin Hyp sold over half a EUR500m eight year green Pfandbrief to investors classified as green at the tightest spread of any euro benchmark covered bond this year on Wednesday, in what head of funding and IR Bodo Winkler hailed as an amazing result, even if yield moves made pricing “a little bizarre”.
Overall ESG strategies are as important to investors as the specifics of green bonds, as they seek to avoid green-washing and encourage brown issuers to make the transition to sustainability.
Berlin Hyp has enhanced its green bond reporting by calculating carbon emission savings based on the specific energy mix of buildings in its green finance portfolio, in what is understood to be a first for a green bond issuer. The lender has meanwhile transferred its Green Pfandbrief brand to support the Association of German Pfandbrief Banks in promoting the product.
Berlin Hyp achieved its highest ever foreign distribution with a EUR500m seven year green Pfandbrief on Friday, after having waited out an “awful” market on Thursday to then attract EUR950m of orders at a level reflecting the “new world”, according to Bodo Winkler, its head of funding and investor relations.