30 March 2020
Since its entry into the green bond market in October 2018, Societe du Grand Paris (SGP) – an infrastructure body wholly owned by the French state – has become one of the major market players, raising almost $8.4 billion from four benchmark issues and five smaller private placements.
Its €1 billion, 30-year transaction in June was its longest-dated benchmark deal at the time, although the company's green credit curve has since been further extended by a 50-year bond issued in February this year.
It was "exceptionally well received", with a final orderbook in excess of €2.9 billion, according to one banker involved in the transaction. More than 100 orders were placed, from more than 15 countries and including a high percentage of "ESG-type investors," she added.
Issuer: Societe du Grand Paris
Date of issue: 3 June 2019
Size: €1 billion
Maturity: 25 May 2050
Use of proceeds: Clean transportation
External review: Sustainalytics
Lead managers: Credit Agricole CIB, Goldman Sachs, HSBC France, JP Morgan Securities
Principles/Guidelines: Green Bond Principles, Climate Bonds Initiative certification
Credit rating: Aa2 (Moody's)
Some 84% of sales were to institutions based outside France, with asset managers taking 56% of the deal and insurance companies and pension funds taking a combined 33%.
As a result of the strong demand, the June bond priced at 37 basis points over French government bonds, 3 basis points below 'initial pricing thoughts'.
The proceeds will be dedicated exclusively to finance the Grand Paris Express automatic metro, which is claimed to be the biggest green infrastructure project underway in Europe. The project is intended to make it much easier for people to travel around the metropolitan area without having to go via the centre of Paris. It will add 68 new stations and 200km of track – 90% of it underground – to the existing 400km of metro and commuter train lines in and around Paris.
Sustainalytics said it believes the project should "contribute to reverse urban sprawl in the Paris metropolitan area, by assisting the long-term modal shift to public transportation" and curb the region's carbon dioxide emissions.
SGP claims the project is "critical to achieving the emissions reduction targets set in the Paris Agreement".
The bond was certified under the Climate Bonds Standard as well as the Green Bond Principles, and SGP was praised by one of the judges for the quality of its impact reporting.