02 April 2019
Issuer: Berlin Hyp
Size: €500 million
Maturity: 7 years; settlement date 22 October 2018
Use of proceeds: Green buildings
External review: ISS-oekom
Issue rating: Aaa (Moody's)
Lead managers: ABN Amro; Bayern LB, Commerzbank; Credit Agricole; JP Morgan and Bankhaus Lampe as co-lead manager
Other highlights/notable features: It is the second time the bank has won this award
Berlin Hyp won the asset-based green bond award by Environmental Finance for the second time this year.
The German commercial bank raised €500 million ($560 million) from its seven-year, senior secured Green Pfandbrief, the third time it issued a mortgage-backed, covered bond.
The bank has continuously worked to improve its Green Bond Framework to strengthen its green finance eligibility.
Bodo Winkler, head of funding and investor relations at Berlin Hyp, says: "In order to make sure that the proceeds of a Berlin Hyp Green Pfandbrief are never used to finance non-green assets, eligible assets have to be on the bank's balance sheet and in the Pfandbrief cover pool before issuance of a new bond."
Proceeds from the issue are used to refinance loans for green buildings, and Berlin Hyp aims to invest an amount equivalent to the proceeds in new green buildings within the term of the bond.
Foreign buyers took 58% of the deal – higher than for any other bond issued by the bank, with Scandinavian and UK buyers taking 20% and 17%, respectively. Sustainable investors took a 45% share of the bond.
Berlin Hyp contributes actively to growing the market for green covered bonds with various activities, such as acting as an Energy-efficient Mortgages Action Plan's (EeMAP) pilot bank and trialling an energy-efficient mortgages framework.
To create a common standard, it allowed German issuers to use its Green Pfandbrief trademark and transferred it to the Association of German Pfandbrief Banks in December 2018.
Winkler added that its outstanding green bonds, totalling €3 billion, now represent 14% of the bank's funding mix.
"Green Bonds are not a niche product at Berlin Hyp, they are an important funding instrument," he said.
Berlin Hyp incentivises loans for green buildings by offering a 10 basis point discount. The bank's strategic objective is to convert 20% of its loan portfolio into green assets by 2020. It has already reached 16%.