Issuers wishing to win over investors with SRI mandates not only need to deliver green and social bonds, but must demonstrate how these fit into a broader sustainability strategy for the future — that was the key takeaway from a Sustainabonds roundtable hosted by SFIL in Paris on 24 May, where the market’s growth, EU initiatives, and pricing were debated.
Ahead of 150th birthday celebrations on 8 May marked by a gift of saplings to its home city, Berlin Hyp tightened its pioneering green bond framework and revealed an increasing positive environmental impact from the programme.
Berlin Hyp took what could be a last chance to secure prevailing attractive funding levels with a EUR500m 10 year green senior unsecured bond on Tuesday, but an allocation of just 20% to SRI accounts disappointed, as the deal’s maturity and spread wasn’t for all in a difficult market.
Berlin Hyp issued a EUR500m 10 year senior green bond yesterday (Tuesday), thereby becoming the bank with the most green benchmarks outstanding, and for the first time it sold the majority of a benchmark issue to non-German accounts, with its green commitment cited as a factor in investors’ support.
Berlin Hyp is planning its second senior green bond, a long dated euro issue expected after a roadshow starting Friday, which would make it the most prolific issuer of green benchmarks. The mandate comes after oekom upgraded the bank’s sustainability corporate rating to put it top of its peer group.
Berlin Hyp’s leadership in the green bond market was recognised in multiple categories by GlobalCapital in its Sustainable & Responsible Capital Markets Awards 2017 on 5 September, as the German lender took home three honours.
A majority of green bonds offer public information on the use of proceeds after issuance, a new report from the Climate Bonds Initiative has found, with a Blackrock official lauding “tremendous” progress in such reporting. However, more is required in certain areas, with some failing to meet basic guidelines.
Berlin Hyp sold a higher share of a Eu500m long six year green Pfandbrief to foreign accounts than on any of its previous benchmark covered bonds, according to head of investor relations and sales Bodo Winkler, while adding accounts new to the credit and achieving tight pricing.
The green and social covered bond markets have considerable potential for growth, according to panellists at an ICMA CBIC/The CBR conference, with a leading investor highlighting his appetite for more paper and “sticky green money” available, but the impact of QE and a lack of data is holding issuers back.
The EMF-ECBC launched a project to create an energy efficient mortgage today (Tuesday) that it said could pave the way for broader take-up of green covered bonds, after Berlin Hyp yesterday inaugurated a combined Pfandbrief and senior green programme with a Eu500m seven year unsecured deal.