A member of the sustainable finance HLEG has warned that a European Commission proposal to include green commitments in bond prospectuses and make them legally binding risks raising costs and deterring issuance unless other requirements are eased or incentives provided.
Green bonds backed by mortgages might seem a natural source of supply from banks. However, a lack of joined-up data is forcing banks to be creative in carving out pools of energy efficient loans. Neil Day explores the building blocks for a bigger market with ABN AMRO’s Joop Hessels.
Those that have broken new ground in sustainable bonds say they have been vindicated by the “unstoppable” movement, while issuance has catalysed internal change as well as attracting new investors. And hopes for the future are high. Tom Revell reports from LBBW’s European Covered Bond Forum in Mainz on 1 March.
The bank green bond market is primed to continue its rapid growth, according to S&P, with the rating agency highlighting the importance of reporting and transparency in achieving a top green score under its approach.
National Australia Bank (NAB) took an innovative approach to green securitisation when it sold a A$300m green tranche as part of a A$2bn residential mortgage backed security (RMBS) on 8 February, with low carbon buildings part of a wider pool of mortgages.
The first legislation relating to an EU sustainable finance taxonomy will come as early as this spring, according to Commission vice president Valdis Dombrovskis, who said today (Friday) that a green bond label will be part of its action plan and a green supporting factor is still on the cards.
The EU High-Level Expert Group (HLEG) on sustainable finance delivered a “manifesto for far-reaching change” in the form of its final recommendations to the European Commission today (Wednesday), with a call for an official EU Green Bond Standard to be introduced this year.
LBBW sold the largest green bond from a European bank on Tuesday, a Eu750m four year senior unsecured debut at the tightest spread of any German senior benchmark, inaugurating a framework from which it can also issue covered bonds and that incorporates a new asset eligibility methodology.
Mizuho Financial Group issued its first green bond on Tuesday, a EUR500m seven year senior bond that is its only outstanding benchmark in euros, and a spokesperson for the Japanese bank told Sustainabonds that the green euro helps diversify its issuance currencies and investor base.