Green covered bond issuance looks set for significant growth thanks to regulatory measures, increasing investor interest and banks’ efforts to improve the identification of green assets and determination to finance such assets, according to S&P, with initiatives such as EeMAP deemed supportive.
Handelsbanken and Raiffeisen Bank International sold inaugural EUR500m green senior bonds this week that benefitted from price and execution certainty, respectively, thanks to their greenness boosting demand amid choppy conditions, according to bankers at and away from the leads.
Raiffeisen Bank International (RBI) is preparing to issue an inaugural green senior unsecured benchmark, embarking on a European roadshow today (Friday), in the latest step of a sustainability strategy that, it says, is based on the principles of group’s 19th century namesake.
Norway’s DNB Boligkreditt issued the biggest green bond from a European bank yesterday (Tuesday), a EUR1.5bn green covered bond debut that provided the clearest evidence yet of a possible “greenium” in the asset class. Sweden’s Handelsbanken today unveiled a new “dark green” framework.
KBC is preparing to issue an inaugural green bond, in senior unsecured format, with the Belgian group today announcing a roadshow to introduce a new framework under which it can issue both secured and unsecured bonds, building on momentum generated by Belgium’s first green government bond in February.
Europe’s “active and engaged” market is at the forefront of global green bond developments, with its financial institutions playing a crucial role in green financial infrastructure, according to a Climate Bonds Initiative analysis.
An SRI portfolio manager warned issuers who are slow to take up green bonds that their credentials may be questioned, at CBI18 last Tuesday, although investors said they acknowledge there is no such thing as the perfect green bond, and one said he would commit to buy non-green issuance from other parts of green bond issuers’ capital structure.
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.
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