The World Bank has hit new heights in bond issuance since the start of the pandemic, as investors have supported IBRD and IDA in the task of alleviating Covid-19’s social and economic damage. Heike Reichelt, head of investor relations and sustainable finance, World Bank Treasury, spoke to Sustainabonds’ Neil Day about how its issuance is connecting investors with impact.
The first sustainability-linked bond (SLB) from a bank suggests the instrument can be a viable and attractive option for financial institutions committed to reaching climate-related and other targets. However, questions remain over its regulatory treatment, while data could pose challenges.
From oil and gas companies escaping exclusion via sustainability-linked bonds, to sovereigns offering greater liquidity via green bonds, Actiam head of fixed income Mehdi Abdi is heartened by key developments in sustainable bonds – although issuers may find him increasingly picky.
The first update to the Green Bond Principles (GBP) since 2018 was issued on Thursday, including formalising recommendations that bond frameworks and external reviews be used, and a recommendation of heightened transparency around issuer-level sustainability aims.
Eika Boligkreditt sold its first green bond on Tuesday, with the green element and a defensive approach contributing to a successful outcome in an uncertain market, according to an official at the Norwegian issuer, whose framework tackles taxonomy alignment and reflects green progress in the Eika Alliance.
Belfius inaugurated a green bond framework last Tuesday with a €500m six year senior non-preferred (SNP) issue and achieved a “greenium” of several basis points, according to lead bankers, as banks took advantage of strong demand for green bonds to tap the euro market for SNP and Tier 2.
The final EU Taxonomy delegated act looks set to prove accommodating to green covered bonds, with a new leaked version aligning with current market practice of the top 15% most energy efficient buildings, as originally recommended by the TEG, and other criteria also relaxed.
A leaked updated draft of the EU Taxonomy delegated act contains looser eligibility criteria that would be applicable to a wider range of buildings, but it could still exclude green bonds under several existing frameworks and has been deemed inconsistent and still overly restrictive.
OP Mortgage Bank issued the first Finnish green covered bond yesterday (Thursday), a €750m deal with proceeds earmarked for energy efficient buildings that achieved a peak €1.6bn-plus book and the tightest 10 year spread since May 2019 – “a great outcome,” according to head of funding Tom Alanen.
Crédit Agricole Italia sold the first Italian green covered bond on Monday, a €500m 12 year deal that achieved the tightest pricing of any Italian covered bond, and its head of financial management said the debut delivered on the French group’s ESG strategy and commitment to investors.