Buyers of green bonds are potentially receiving climate-related credit protection for free, Bank of England governor Mark Carney highlighted at the World Bank/IMF Annual Meetings yesterday (Saturday), but he said prudential regulation should not be used as a “backdoor” for climate policy.
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.
Sumitomo Mitsui Financial Group (SMFG) sold the first green HoldCo transaction in euros on Wednesday, a EUR500m seven year fixed rate trade that attracted over EUR1.6bn of demand, pre-reconciliation, to achieve tight pricing, while Japanese peer Mizuho is due with a senior trade after a roadshow ending today (Friday).
SBAB served the Swedish environmental cause and its local investor base with a SEK1.75bn (EUR183m) five year green bond on Wednesday, according to the bank’s head of funding, while the senior unsecured deal was seen coming some 6bp through its curve.
Hypo Vorarlberg reflected its state’s environmental ambitions with the first Austrian green bank bond on 12 September, a EUR300m five year deal that was also the first senior unsecured issue from the country since the Heta crisis, with its green status deemed a factor in smooth execution.
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.
The EMF-ECBC is hoping to gain European Commission support and funding for developing a data protocol that would help optimise its energy efficient mortgages initiative, although a speaker at a plenary meeting of the industry body warned that “the best is the enemy of the good”.
Deutsche Kreditbank head of treasury Thomas Pönisch attributed impressive pricing on its second green bond on Tuesday to the “green factor”, while the German lender extended its commitment to the market with a longer oekom agreement and a larger pool that could see a private placement follow.
Green bonds do not yet offer cheaper funding than conventional comparables, according to a report from the Climate Bonds Initiative (CBI) and the International Finance Corporation (IFC), even if momentum reflected in moves from IPTs and secondary performance – notably on an Apple bond – suggests a positive future.
A former Bank of England MPC and PRA board member played down hopes of a cut in risk weights for green mortgages at a meeting yesterday (Thursday) where members of the European Commission high level expert group (HLEG) and others discussed their recommendations on sustainable finance.
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