Green bond of the Year - bank: Barclays

Channels: Green Bonds

Companies: Barclays, Carbon Trust

Barclays' €500 million ($616 million) green bond was the first issued by a UK bank to finance UK assets.

Deal highlights:

Issuer: Barclays

Size: €500 million

Maturity: November 2023

Coupon: 0.625%

Use of proceeds: Energy efficiency

Deal type: Use of proceeds

Credit rating: Fitch (A), Moody's (Baa2), S&P Global (BBB)

Lead managers: ABN Amro, Barclays, Credit Agricole CIB, SEB

External review: Carbon Trust

Other highlights/notable features:

First green bond issued by a UK bank to finance UK assets; Barclays is believed to be the first organisation to use the data from UK energy performance certificates.

Proceeds from the bond will finance or refinance mortgages on residential properties that are estimated to be among the best-performing 15% of buildings in England and Wales for carbon intensity.

To identify eligible assets, Barclays used energy efficiency data that was made publicly available by the UK government in the second quarter of 2017. It is believed to be the first time a bank has used this data from energy performance certificates (EPCs) to analyse the carbon performance of its entire mortgage portfolio, paving the way for other organisations to use the data in a similar fashion, it said.

Barclays' green bond framework also effectively committed to maintain a mortgage portfolio within the 15% most energy efficient properties, by factoring future expected improvements in UK housing energy performance into eligibility criteria.

Carbon Trust, a UK non-profit organisation, provided a second party opinion on the bond. It was the first time the organisation has provided such a service.

Prior to settlement, Barclays mandated Carbon Trust to analyse the strengths and limitations of EPC ratings in the UK, and study existing mortgage-backed green bonds in other European countries. Barclays said this helped it design a green bond framework which was "very well-received" by investors, who remarked positively on the high level of transparency it offered and the innovation behind the energy improvement formula, it said.

The green bond was 4.5 times oversubscribed, attracting orders totalling €1.85 billion, with the majority of investment coming from Central and Western Europe.