29 November 2017

Green bonds round-up, 29 November 2017

MTA issue exceeds $2bn

The latest green bond from New York's Metropolitan Transportation Authority (MTA) reached $2.021 billion, confirming it as the largest ever municipal green bond.

The bond consists of 32 tranches with maturities ranging from 2027 to 2040 and coupons varying between 2.91% and 5%.

As announced last week, the transaction has been certified by the Climate Bonds Initiative, and rated AA+ by KBRA, AA- by Fitch, A1 by Moody's and AA- by S&P Global. The proceeds will be used to refund outstanding Transportation Revenue Bonds.

Toyota returns to the market with fourth green issue

Toyota Motor Credit Corporation has issued €600 million ($711 million) of unsecured, zero-coupon green eurobonds, in its fourth green bond transaction.

It has previously issued three asset-backed green bonds totalling $4.6 billion.

The proceeds of the latest issue will be used to finance new retail loan and lease contracts for those of its vehicles that meet three key criteria:

  • they are gasoline-electric hybrids or use 'alternative' fuels;
  • their fuel consumption is at least 35 miles per gallon; and
  • they have an Environmental Protection Agency smog rating of at least 8.

The bonds will mature in July 2021 and were issued at 99.81% of their nominal amount, giving an initial annual yield of 0.052%. Toyota has applied for them to be listed on the London Stock Exchange.

The selling syndicate comprised: Barclays, BNP Paribas, Crédit Agricole CIB, ING, UniCredit, MUFG Securities, Banca IMI, Banco Bradesco, Commerzbank, National Australia Bank and Société Générale.

Toyota has issued a green bond framework for the new bonds which Sustainalytics has said aligns with the Green Bond Principles 2017. 

ADB sells gender equality bond to Dai-ichi Life

A NZD130 million ($90 million) gender equality bond has been issued by the Asian Development Bank (ADB).

The 10-year issue was structured by Crédit Agricole CIB which also acted as sole lead manager. The whole issue was purchased by Dai-ichi Life Insurance Company in a private placement.

"Incorporating gender equality into ADB's work is essential in our mission to promote sustainable and inclusive growth in Asia and the Pacific," said the bank's treasurer Pierre Van Peteghem.

Manila-based ADB said the empowerment of women is one of five key 'drivers of change'.

The bond proceeds will be used to finance a pool of eligible projects that promote gender equality and women's empowerment such as the Second Small and Medium-Sized Enterprise Development project in Bangladesh which, in addition to providing access to credit, provides women with tools to increase their financial literacy.

AlphaFixe launches first Canadian green bond fund

A green bond fund with C$100 million ($78 million) in commitments has been launched by Montreal-based investment manager AlphaFixe Capital.

It is the first to be managed from inside Canada and is unique, Simon Senécal, AlphaFixe's director of responsible investment, told Environmental Finance, because it will swap the bonds it buys into Canadian dollars, so that the fund will be hedged against currency and interest rate risks.

The company aims to build the portfolio so it has a similar risk profile in terms of sector allocation, duration, and yield to maturity to the FTSE TMX Canada Universe Bond index, "which our clients are used to", said Sénecal.

"That way, it is almost as if they were invested in the Canadian market, but they are contributing to the environmental benefits that the underlying projects yield. Since there aren't enough Canadian green bond issuers or green bonds issued in CAD to build a diversified portfolio, we think we are innovating by offering a green bond fund benched on a non-green bond index," he added.

The company expects PRI signatories based in Canada to be among the main investors, including pension funds, foundations and insurance companies, but says it is also open to investors from abroad. The fund already has C$100 million in commitments.

It will invest mostly in dollar- and euro-denominated green bonds, and will have a smaller holding in Canadian dollar-denominated issues. It will not invest in emerging market issues.

If a bond is labelled as green, it has to comply with the Green Bond Principles (GBPs) to be eligible for the fund. For unlabelled climate-aligned bonds, at least 90% of the company's revenues must come from 'green activities', according to Sénecal.

Japanese rail company issues green bond

The Japan Railway Construction, Transport and Technology Agency (JRTT), has issued a 10-year, ¥20 billion ($179.76 million) green bond which it claims is the first to be verified by the Ministry of the Environment as conforming with its Green Bond Guidelines 2017.

The proceeds will be used to finance the Urban Railway Convenience Enhancement Project (the Eastern Kanagawa Lines), in order to reduce the nation's greenhouse gas emissions as more people choose to travel by train rather than buses and cars.

No details about the coupon or financial institutions involved in the transaction were immediately available, although Dai-ichi Life Insurance Company has confirmed that it was among the buyers of the bond.

Westpac prices latest climate bond

Westpac has set a coupon of 0.625% on its latest €500 million ($592 million) green bond.

Its proceeds will be used to finance or re-finance projects in clean transportation, energy efficiency and renewable energy that are in accordance with the Climate Bonds Standards.

The lead managers were Westpac, Bank of America Merrill Lynch, BNP Paribas and Crédit Agricole CIB, while DZ Bank and Norddeutsche Landesbank acted as co-joint managers.

The bond is listed on the London Stock Exchange, and has been rated Aa3 by Moody's and AA- by S&P Global.

San Francisco park district issues inaugural green bonds

California's East Bay Regional Park District Board of Directors (EBRPD) has issued its first green bonds.

The transaction comprises $20 million of 'green refunding' bonds maturing in 2029 and $30 million of 'new money' green bonds maturing in 2037 and is part of a wider $124.6 million issue of general obligation bonds.

EBRPD, which represents a 1,745 square-mile park district on the eastern side of San Francisco Bay, said the green refunding bonds priced three basis points tighter than the non-green refunding bonds issued at the same time.

The new money green bonds priced just 0.003 basis points tighter than their non-green equivalents.

"It was a small positive effect, but maybe noteworthy, since muni green bonds don't usually show any pricing advantage over plain vanilla," said Deborah Spaulding, assistant finance officer at EBRPD.

The proceeds will finance and refinance land-use projects aligned with the district's green bond framework.

The bonds received the highest score (GB1) under Moody's Green Bond Assessment. First Environment was an advisor on the green bond framework and KNN was financial advisor.

The transaction is expected to close in the week beginning 4 December.

India's PFC issues its first green bond

Indian infrastructure company, Power Finance Corporation (PFC), has priced its first green bond. The $400 million transaction has a 10-year tenor and a semi-annual 3.75% coupon.

The senior unsecured fixed-rate note is listed on the Singapore and London Stock Exchanges, and is the first international bond from PFC in almost two decades.

Barclays, SBI Capital Markets and Standard Chartered were the bookrunners on the transaction.

The proceeds will be used to finance or re-finance eligible renewable energy and energy efficiency projects.

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