Green bond round-up

Channels: Green Bonds

Companies: Enel, MUFG, FENC, World Bank

People: Carol Wang, Kristalina Georgieva, Roger Beauchemin

Enel’s second green bond attracts €3bn of orders

Italian utility Enel has successfully issued its second green bond, raising €1.25 billion ($1.5 billion).

The bond which received subscriptions amounting to more than €3 billion, has a coupon of 1.125% and matures in September 2026.

It is expected to be listed on the Irish Stock Exchange, the Luxembourg Stock Exchange and the “ExtraMOT PRO” managed by Borsa Italiana. Banca IMI, BNP Paribas, Credit Agricole CIB, HSBC, ING Bank, JP Morgan, Mediobanca, Natixis, SMBC Nikko, Societe Generale, UBI Banca and UniCredit Bank acted as joint-bookrunners. 

Independent advisor Vigeo Eiris prepared Enel’s new Green Bond Framework as well as the second party opinion.

The eligible use of proceeds includes projects in the development, construction and repowering of renewables generation plants and the construction, management and operation of transmission and distribution networks, as well as smart metering systems. 

MUFG mulls second green bond

Japan-based banking group MUFG has been roadshowing with European investors ahead of a potential second green bond issue.

It has received a second opinion on its updated green bond framework from Sustainalytics.

The company performed roadshows in London, Paris and Stockholm in early December, although Environmental Finance understands that a final decision on whether to issue the bond has yet to be taken.

MUFG issued its inaugural $500 million green bond in September 2016, with a tenor of seven years and a coupon of 2.527%, to finance solar and wind energy projects.

Under the terms of the updated framework, MUFG will loan an amount equivalent to the proceeds of any green bond it issues to its subsidiary Bank of Tokyo-Mitsubishi UFJ (BTMU), which will then use the funds to finance renewables projects around the world. These will include new and existing wind and solar projects.

Sustainalytics said the framework “is credible and impactful”, and aligns with the four pillars of the Green Bond Principles 2017. A green bond issued under the framework would advance the UN Sustainable Development Goal 7, ‘Affordable and Clean Energy’, it added.

The research and ratings provider added that “following engagement between MUFG and Sustainalytics, some elements of the green bond framework were clarified to ensure an alignment with the level of disclosure expected by the GBPs 2017.”

In order for a project to be funded by the proceeds from the bond, expenditures related to solar and wind projects must satisfy the Equator Principles’ risk management framework criteria, indicating that they have limited or no adverse environmental and social risks.

As part of the issuance, MUFG will publish an annual impact report detailing the amount of power generated from renewable energy produced and the prospective emissions offset by the projects.

Taiwan’s FENC raises TWD3bn through inaugural green bond

Far Eastern New Century Corporation (FENC) has issued its inaugural green bond, raising TWD3 billion ($101.5 million).

FENC is in the textile, petrochemical and polyester business but it is also active in the cement, shipping, retail and telecommunication sectors.

The transaction means FENC is the first non-financial and non-state-owned company to issue a green bond in Taiwan, denominated in the local currency.

Proceeds from the issue, to be listed on the Taipei Stock Exchange, will finance green projects including recycled polyethylene terephthalate (PET), waterless dyeing and green building projects.

The bonds carry a coupon of 0.95% and will mature in five years. They settled on 8 January.

Carol Wang, senior manager at FENC’s finance department, told Environmental Finance: “To us, there’s no alternative to sustainable development. As a responsible global corporate citizen, we work hard to innovate solutions and implement sustainable policies, processes and practices that protect the quality and quantity of habitats and ecosystems worldwide.

“To realise the above sustainable strategies, green bond issuance will be the perfect match for the funding needs of our long-term capital investments.”

The recycled PET project will require TWD966 million of investment, while a further TWD2.87 billion will be deployed to green buildings. FENC estimates the investment requirement for the new batch polymer and the waterless dyeing projects at TWD463 million and TWD98 million, respectively.

KGI Securities was the principle underwriter, alongside 11 other local underwriters. DNV-GL was the verifier for green investment projects and Deloitte was the verifier for the funding proposal.

Compatriot Advanced Semiconductor Engineering was the first Taiwanese company to issue a green bond, raising $300 million in 2014, listed on the Singapore Exchange.

Ligonier Valley School District to raise $10m

Ligonier Valley School District (LVSD) is planning to issue a $10 million green bond to finance a series of environmentally-friendly projects.

LVSD is a school district located east of Pittsburgh in the US, serving a population of over 16,000 people.

The final maturity date of the Series A 2018 bonds is in 2033. The transaction is expected to price next week and close the week starting 19 February.

It has teamed up with Constellation Energy Group to carry out efficient lighting upgrades, water conservation, roof replacements and other projects.

Moody’s Investors Service has assigned a Green Bond Assessment of GB1 – or excellent – on the bonds.

Analyst Matt Kuchtyak said: “In partnership with Constellation Energy Group, we see very strong disclosure on the use of proceeds, down to the project component level, with clearly articulated anticipated savings in energy consumption.”

There are $16.7 million of energy efficiency improvements identified in the district. As well as the $10 million green bond, LVSD will issue $3.8 million of Series B 2018 taxable bonds to finance the projects. The remaining amount will be covered by another loan.

Given that not all individual project components have a quantifiable positive benefit, the district elected to take a conservative approach and only label $10 million of the total $13.8 million as green bonds, Moody’s added.

Green bond proceeds will be grouped in a project fund with the series from the Series B of bonds.

In March 2021, a year after the expected project completion, Constellation will publish an annual report on behalf of the district highlighting energy savings from the projects.

World Bank raises C$1bn to raise awareness for gender equality

The World Bank has raised C$1 billion ($800 million) with a “sustainable development bond” as part of its efforts to promote awareness for the empowerment of women and girls.

A spokesperson for World Bank said the proceeds will be used to lend to companies promoting gender equality, for example transport firms that make efforts to ensure women’s safety.

Gender equality is one of the 17 United Nations’ Sustainable Development Goals (SDGs), and one of the five key themes under Canada’s 2018 presidency of the Group of Seven (G7).

World Bank CEO Kristalina Georgieva said: “We need $7 trillion to achieve the SDGs – and we will not achieve them if we leave half our population behind.

“This is why the World Bank and Canada are committed to advancing gender equality and the empowerment of women. It’s not just the right thing to do – it’s the smart thing to do to ensure a better future for all.”

The bond, which has a coupon of 2.25% per year, was oversubscribed, with more than 40 investors placing orders for around C$1.2 billion. More than half of the investors were from Canada, while 24% of investors came from Europe and Middle East.

The bond will mature in 2023 and will be listed on the Luxembourg Stock Exchange. The settlement date is 17 January.

BMO Capital Markets and Bank of America Merrill Lynch were joint lead managers.

Roger Beauchemin, CEO of key investor Addenda Capital, said: “This bond reinforces our view that investors must look beyond green bond labels to identify opportunities for clients to have a positive social and environmental impacts while still generating competitive investment returns.”

The issue marks the World Bank’s first outing in the Canadian dollar-denominated market for two years.

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