The autonomous community of Xunta de Galicia issued its inaugural sustainability bond, at €500 million ($584 million), following the establishment of its Sustainable Finance Framework in 2020.
The framework, which has a second opinion from Sustainalytics, targets six green and five social eligible categories. Sustainalytics concluded it aligns with the four core principles of the Green Bond Principles (GBPs) and Social Bond Principles (SBPs).
Oversubscribed by more than four times in 90 minutes of book building, investors that factor environmental, social and governance (ESG) policies into their investments accounted for 57% of the bond's allocation. The size of the book allowed Xunta de Galicia to tighten initial guidance from Spanish Sovereign Bonds (SPGB) by more than 15 basis points, making it the lowest coupon ever achieved by a Spanish Region in a euro public benchmark transaction
"This [bond] shows the spread and establishment of sustainable bonds in Europe," commented one Environmental Finance Bond Awards judge.
Issuer: Xunta de Galicia
Size: €500 million ($587.9 million)
Maturity: September 2027, 7 years
Use of Proceeds: Renewable energy, energy efficiency, pollution prevention and control, environmental management, clean transport, sustainable water and wastewater management, affordable basic infrastructure, housing and access to essential services, employment generation
External Review: Sustainalytics
Lead managers: HSBC
Other highlights/notable features: Lowest coupon ever achieved by a Spanish Region in a euro public benchmark transaction