Award for innovation - bond structure (green bond): Symbiotics
Symbiotics uses a special purpose vehicle (SPV) to help small firms in emerging and frontier markets to issue green, social and sustainability bonds.
These issuers would normally be too small to tap the green bond market.
The SPV is a passthrough entity set-up in Luxembourg with its own Sustainable Bond Framework, which received a second party opinion from DNV GL in December 2019, helping to lower the cost of issuance.
The SPV enters into a loan agreement with the investee – typically a financial institution – whereby the funds for that specific loan are provided by investors via the sale of notes under a bond issuance (see diagram). Each bond is linked to a single loan. This process provides these companies access to a wide range of institutional investors that otherwise they would not have access to, said Symbiotics in its award application.
All bonds are listed on the Luxembourg Green Exchange.
"It is Symbiotics' mission and belief that this inclusive approach enabling a wider range of companies to issue green, social or sustainability bonds within emerging and frontier markets, will considerably contribute to adoption of the ICMA Green, Social and Sustainability Bond Principles worldwide," added Symbiotics.
In 2020 Symbiotics issued two green bonds, four social bonds and one sustainability bond, with a combined value of around $60 million.
For example, in June 2020, Symbiotics arranged its first green bond, for Pan Asia Banking Corporation in Sri Lanka, for a total volume of LKR1.42 billion ($7.75 million). It was the first green bond in Sri Lanka and the first structured under Symbiotics' Sustainability, Social and Green Bond framework. The proceeds were used to finance projects in fields such as renewable energy, energy efficiency, sustainable agriculture and clean transportation.
One judge said: "We need more green bonds from/for frontier markets. This is a leading example."
Another judge lauded the "inclusive approach" and "credible administrative set up".