Green bonds round-up, 14 December 2017

Channels: Green Bonds

Companies: Amundi, IFC, BDO Unibank, Banco Nacional de Costa Rica, Moody's, Palladium

Amundi and IFC's emerging market green bond fund raises $1.2bn

Amundi has raised more than $1.2 billion of commitments for an emerging market green bond fund it launched in October.

The European Bank for Reconstruction and Development (EBRD) has said it will invest up to $100 million in the fund.

The French asset manager, which handles assets of €1.4 trillion, aims for the Amundi Planet Emerging Green One green bond fund to become the world's largest, with a target size of up to $2 billion. It claims it is the first dedicated exclusively to emerging markets.

The fund will work to allocate a multiple of at least three times EBRD's investment to the organisation's countries of operation, as part of its regional diversification policy.

The fund was set up in partnership with the International Finance Corporation (IFC), the private sector arm of the World Bank.

EBRD said that despite a very busy green bond market globally, large regional gaps still exist.

Sir Suma Chakrabarti, president of EBRD, said: "This new fund is expected to contribute to significantly increasing the availability of green finance in the EBRD regions, raising awareness among domestic investors for green capital market products and supporting local financial institutions in issuing green bonds in line with the Green Bond Principles."


Philippines' BDO raises $150m through inaugural green bond

BDO Unibank has become the first Filipino bank to tap the green bond market, raising $150 million through its inaugural issue.

The International Finance Corporation (IFC) was the sole investor in the green bond, proceeds of which will be used exclusively to finance climate-smart projects including renewable energy, green buildings and energy-efficient equipment.

IFC, the private sector arm of the World Bank, said the green bond will contribute to the country's target of reducing carbon emissions by 70% by 2030, and will help save 93,000 tonnes of carbon dioxide emissions per year by 2022.

BDO – the largest bank in the Philippines – was following in the footsteps of its compatriot AP Renewables, which issued a PHP10.7 billion ($212 million) green bond in February 2016.

The Asian Development Bank, a repeat issuer of green bonds, is also based in the Philippines.

For IFC, this is the first green bond investment in a financial institution in the region.

Vivek Pathak, IFC's director for east Asia and the Pacific, said: "We aim to create a vibrant green bond market in the country and stimulate private sector investment in renewable energy and energy efficiency." 

IFC has so far issued $7.25 billion in green bonds in 12 currencies. 


Moody's assigns Banco Nacional de Costa Rica green bond second-tier assessment

Moody's Investors Service has retrospectively assigned a green bond assessment score of GB2 to a $500 million green bond issued last year by Banco Nacional de Costa Rica (BNCR).

It is believed to be the first time Moody's has assigned a score lower than its highest category, GB1, or "excellent". A score of GB2, or "very good", also reflects a lack of an external review of its green bond framework or projects, according to Charles Berckmann, an assistant vice-president and lead analyst in Moody's green bond assessment team.

BNCR has deployed around $424 million of proceeds to support the development of a portfolio of wind and hydro projects in Costa Rica.

Berckmann said: "BNCR's commitment to a carbon-neutral economy is evident with its inaugural green bond issuance in April 2016 with proceeds fully allocated to eligible renewable generation projects that largely align with the Green Bond Principles."

However, Moody's pointed out the lack of a second party opinion or independent verification.

"For example, hydro power projects may, in some cases, carry greater negative environmental impacts compared to other renewable generating sources," Moody's said.

The bank has committed to provide annual updates through the life of the 5.875% senior notes due in April 2021.


Palladium launches health-focused impact bond for India

A novel 'impact' bond has come to market that aims to reduce maternal and newborn mortality rates in Rajasthan, India.

The Rajasthan Development Impact Bond, or 'Utkrisht' bond', has been structured by impact investment specialists Palladium. It will provide funding of up to $8 million, to as many as 440 private healthcare facilities in Rajasthan. If fully successful, Palladium estimates that up to 10,000 maternal and newborn deaths could be averted over five-years.

A cornerstone investor is the UBS Optimus Foundation, which is channelling up to $3.5 million from private clients of the Swiss bank. This initial working capital will enable work to begin in private healthcare facilities in Rajasthan.

Other partners, who are also investing in the bond, include: US AID, PSI – a US health charity, HLFPPT – an Indian non-profit, and MSD for Mothers, an initiative of the Merck pharmaceutical company.

These organisations are also working closely with the government of Rajasthan, Peter Vanderwal, who leads Palladium's work on impact bonds, told Environmental Finance.

As for most impact bonds, the returns to investors depend on the outcomes achieved. In this case, if all the health improvement targets are met, investors could receive a maximum return of 8%, he added.  If the projects fail, however, they could potentially lose some, or all, of their capital invested.

The aim is to ensure lessons are learned from this bond and to make it a replicable model for transferring risk from the public sector to the private sector, Vanderwal said.


Swedish insurers invest in SEK500m green bond

Five insurers are among the investors in a five-year SEK500m ($59.2m) green bond issued by Swedish municipality Örebro in partnership with Nordic bank SEB.

According to website Risk & Försäkring, this is the third green bond issued by Örebro as part of its work to fund environmentally friendly projects.

Several Swedish insurers have invested in it, including Folksam and its pension unit KPA Pension, SPP/Storebrand, Länsförsäkringar Södermanland, Länsförsäkringar Västernorrland, Länsförsäkringar Östgöta. Other investors include QQM Fund Management and Nordic Investment Bank.

Folksam is one of the leading buyers of green bonds and has participated in previous Örebro issues. 

In total, the municipality has issued SEK1.8bn of green bonds. The proceeds are used to finance a variety of projects including wind power, nurseries, schools and housing.

To complete these projects, Örebro has partnered with renewable energy and real estate firms including Kumbro Vind, Örebrobostäder, Futurum and Örebroporten. 

Subscribe to Environmental Finance for more green bond news and analysis

Michael Hurley, Nick Roumpis