A euro-denominated Green Bond benchmark which is a five-year 600 million euro (684 million U.S. dollars) global transaction was launched by the London-based European Bank for Reconstruction and Development (EBRD), the organization announced on Friday.
This is the inaugural benchmark Green Bond in the euro market of the EBRD and it is also the fourth benchmark-sized Green Bond.
A wide range of environmentally and socially sustainable projects would be financed from the revenue that would be generated from the EBRD’s environmental bonds. Such projects include investments in energy efficiency, renewable energy, water management, waste management and air pollution prevention and sustainable transport.
Inclusive of 379 projects worth a total of 4.1 billion euros based on operating assets as at 30 Sep 2018, the Green Project Portfolio of the EBRD has been financed by the agency through the issuance of Green Bonds since 2010.
With a total investment made to date to the tune of about 12.2 billion euros in energy efficiency, climate change and resource finance under its Sustainable Resource Initiative, the EBRD is amongst the largest of investors in environmental projects in its countries of operations.
The Sustainable & Responsible Investment (“SRI”) community welcomed this opportunity to add the EBRD name to their EUR portfolios because EBRD’s reputation and credibility is firmly established as one of the pioneers in the Green Bond market. Investors with a SRI focus were allocated more than two-thirds of the final deal. A good demand from other high quality Central Bank and Bank Treasury investors was also noted for the bonds by the EBRD. According to the organization, the latest bond was targeted to reach of 500 million euros but strong demand saw it reaching an order book of more than 680 million euros. In order to satisfy the rise in demand, the EBRD’s newest bond was flexible in its sizing and upsize and was able to engage in transaction of up to €600million even while keeping a tight price margin.
The announcement of the launch of the first euro dominated Green Bond, was followed by release of IPTs the next morning along with a global investor conference call. During the call, the EBRD focused on its Green Bond Framework and its pledge to adhere to the Green Bond Principles. Initial pricing thoughts (IPTs) were released at MS-12bps area in London on Thursday while the Joint Lead Managers opened books a little later. There was quite a strong momentum during the morning, as orders were placed by the high quality real money accounts across Europe. That allowed the spread to set tighter at MS less 13bps because the booked orders amounted to more than 680million euros. The booking were closed by noon on the same day and the very limited pricing sensitivity of the bond despite the demand reflected the quality of EBRD credit and green framework.
(Adapted from EBRD.com & XinhuaNet.com)