14 January 2014

EIB green bond hits record-breaking €1.5bn after 'tap'

The European Investment Bank (EIB) has completed a new tranche of one of its green bonds, making it the largest issue in the market.

The bank raised another €350 million ($480 million) for its Climate Awareness Bond (CAB) maturing in November 2019 through the reopening, or 'tapping', of the issue bringing its total size to €1.5 billion.

The transaction marked the fourth tranche of the bond, which was originally issued in July last year and became the first CAB to adopt the EIB's ECoop framework. 

The ECoop framework sees the EIB issue fixed rate mini-benchmark bonds of as little as €500 million that are increased over time in taps of at least €250 million based on investor demand. The framework was used to assure investors that the yield matches that of mainstream bonds of the same size.

Proceeds of the bond, which pays an annual coupon of 1.375%, will finance renewable energy and energy efficiency projects.

Bank of America Merrill Lynch, Credit Agricole, Commerzbank, DZ Bank and UniCredit were lead managers of the bond.

"We are delighted about the ongoing development in this sector," said Hermann Behrends, director, public sector syndicate at Commerzbank. "The interest for these products is constantly increasing also with what used to be conventional investors."

The bond tap, which is the first euro-denominated green bond of 2014, follows last week's EIB issue of its first green bond denominated in Swiss Francs.

Elza Holmstedt Pell

Green Bonds