The European Commission could expand the European Banking Authority’s mandates for follow-up work on the EU covered bond directive to include recommendations on green covered bonds, which were a key topic for the European Central Bank at a recent Helsinki European Covered Bond Council plenary.
Caffil sold the first bond from a new and enlarged group green, social and sustainability framework on Tuesday, a €750m five year green transaction that benefited from the scarcity of both its maturity and ESG nature, according to SFIL’s Gonzague Veillas.
ECB officials called for greater disclosure of all covered bonds’ climate-related risks at a European Covered Bond Council plenary last week, while speakers were sympathetic towards a flexible definition of green covered bonds as the EBA asked the industry whether it feels the asset class requires a dedicated framework.
The European Covered Bond Council is working on a definition of green covered bonds aimed at reflecting the distinct characteristics of the instrument to ensure its appropriate treatment in incoming regulations, and following a Green Bond Principles update deemed contradictory to its core feature by some.
Berlin Hyp became the first European bank to have issued in green, social and sustainability-linked formats with the launch of a €750m 10 year mortgage Pfandbrief on Tuesday supporting affordable housing, and the bank plans to be a similarly familiar face in the social market as it is in green bonds.
Deutsche Kreditbank (DKB) on Thursday issued the first benchmark social mortgage Pfandbrief, a €500m 10 year that attracted €2.36bn of orders and which tackles the politically sensitive topic of housing in its hometown of Berlin.
Growth in sustainable covered bond issuance is expected to moderate this year after a doubling of such issuance in 2021, with constraints on appropriate assets holding back growth, and regulatory developments a mixed blessing for issuers hoping to tap into investor enthusiasm for such bonds.
ICMA, the IFC and UN Women have launched a guide outlining practical ways to use sustainable debt to advance gender equality, with the bond market yet to realise its potential to meaningfully contribute to SDG 5, according to proponents of the new guide.
Net zero ambitions abounded during the Finance Day of the COP 26 Presidency Programme in Glasgow on Wednesday, with a Mark Carney-led alliance touting a $130tn headline figure, but critics questioned whether such pledges are sufficient.
The European Union issued its first green bond to unprecedented demand yesterday (Tuesday), raising €12bn in the largest green bond ever, a 15 year deal that attracted over €135bn of orders, representing an endorsement of the Commission’s ESG direction.
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