Market Blog #25 - 10/5/19: April GB issuance reaches USD11.8bn driven by corporates:
Nedbank issues Certified Climate Bond: Bank of Jiangsu issues largest bond: Royal Bank of
Canada makes debut: news, gossip and more!

Highlights:•

April issuance at USD11.8bn, below the USD13bn in 2018 but pending inclusion of Fannie Mae deals•

China: Bank of Jiangsu becomes the most recent new issuer from China, issuing April’s largest bond•Canada: Royal Bank of Canada makes its market debut, becoming the second bank to issue a GB•

France: La Banque Postale follows its parent La Poste, issuing its first GB to finance renewable energy•

South Africa: Nedbank becomes the first South African financial corporate to issue a Certified Climate Bond•

Hong Kong Government signs Green Bond Pledge and HKMA signals green finance push

New release – Green Bond Pricing in the Primary Market: H2 2018
The 7th paper in our series analyses 34 benchmark-sized bonds, including USD21.5bn of EURdenominated green bonds and USD7.5bn of USD green bonds. 53% of green bonds were allocated toinvestors declaring themselves as green.
In this edition, we spotlight the Chinese green bond market to highlight developments andopportunities for investors. China is the largest source of emerging market (EM) green bonds.
Guest author Jason Mortimer explores whether green bonds offer better risk-return characteristics
or exhibit downside risk protection, compared to vanilla equivalents in the secondary market.

Green bond deals across the globe – 20192019 Issued

540 Bn62.8 Bn

USD Bn
0

100

200

300

583 Bn400

Go here to see the full list of new and repeat issuers in April.

500

600

Total Outsanding

700

Total Issued

At a glance
2016-2019 comparison of issuer type mix for April
100%
Loan

80%

Sovereign
Government-Backed Entity

60%

Local government
Development Bank

40%

Non-financial corporate

20%

Financial corporate
ABS

0%
2016

2017

2018

2019

The breakdown of issuer types for April reveals a changing composition compared to previous years. As Fannie Mae figures
for April have not been released yet, ABS issuance comes in at nil since there were no other securitized bonds.
Corporates appear to be gaining prominence, with both financial and non-financial corporates each representing around athird of April issuance compared to 20% last year.
•

Within financial corporates, debut Chinese issuer Bank of Jiangsu issued the largest bond in April by far, for an amountof CNY10bn (USD1.5bn), whilst Nedbank issued the first Certified Climate Bond from a South African financial
corporate (second ever from South Africa, following the City of Cape Town in 2017).

•

The largest non-financial corporate issuers were Italian energy companies ERG SpA (a debut) and Terna, as well as
Toyota Finance, each issuing about USD550m. They were closely followed by repeat issuer and paper producer Klabin(USD500m), which marked the first Brazilian green bond of 2019.

Driven by issuance from Spain (see Market Blog #24) and La Banque Postale’s debut EUR750m green bond, the share ofgovernment-backed entities grew from 8% in April 2018 to 21% this April. After France’s National Postal Service, La Poste,
issued its first green bond in late 2018, its banking arm La Banque Postale has now done the same.
Local government issuance was also stronger this year, largely due to Illinois Finance Authority’s inaugural USD450m bondto finance water projects, which adds to the already diverse pool of US Muni issuers.
On the other hand, although sovereign issuance is picking up in general – with multiple new issuers expected (such as the
Netherlands, Chile, Spain, Egypt) – April saw no sovereigns coming to market. May will be different, with the Republic ofFrance having tapped the green bond market for another EUR1.9bn (USD2.3bn) on 6 May, and the Netherlands expected
to close a Certified Climate Bond (its debut sovereign green bond) on the 23rd.
China came in at the top last month, fuelled by Bank of Jiangsu. Three European green bond markets follow, each withmore than USD1bn. The USA comes in fifth place (although this excludes Fannie Mae numbers). EM issuance accounted
for 22% but with a lack of issuer variety, since the vast majority came from only two issuers (Bank of Jiangsu and Klabin).

April issuance by country
3.0 BnApr-18Apr-192.5 Bn2.0 BnUSDbn

1.5 Bn1.0 Bn0.5 Bn0.0 BnWe also saw a relatively large volume of excluded deals in April, totalling USD7.4bn (compared to USD2.6bn in 2018). 70%of this came from China, driven by a large deal from China Three Gorges Group (CNY20bn/USD2.9bn) – excluded due tonearly a third of proceeds being earmarked for working capital – and one from Bank of Guangzhou (CNY5bn)/USD745m),
which was excluded due to 10% funding fossil fuel-based combined heat and power (CHP) plant.
As expected, there has been an increasing volume of bonds with a social component (including sustainability bonds),
especially from Europe. Whilst this is a positive trend, we often have to exclude such bonds from our green bond database(see CBI green bond database methodology). In April, for example, we excluded a EUR750m/USD845m sustainability bondfrom Belgian local government Flemish Community, a GBP350m bond from British Yorkshire Water and a EUR250m deal
from German Otto Group (see Pending and Excluded below).
> The full list of new and repeat issuers here.
> Click on the issuer name to access the new issue deal sheet in the online bond library.

Certified Climate Bonds
Nedbank (ZAR1.66bn/USD116m), South Africa, issued its debut green bond in 2012, and has now issued its first Certified
Climate Bond, verified by the Carbon Trust. The proceeds of the bond will be used to finance four new solar and windenergy generation assets in South Africa that are currently under construction. Netbank will make annual reports available
to bondholders, which will include information on the allocation of proceeds per project and the amount of electricity
generated.
We welcome this bond for several reasons. It is the first Certified Climate Bond from a South African corporate – the only
other one from the country was issued by the City of Cape Town in 2017 – and the second of the kind in Africa, following
Nigerian Access Bank’s in March. The fact that Nedbank has now decided to obtain Certification is also positive.
More broadly, financing renewable energy in South Africa is crucial. In 2018, the Government announced a 2030 target of
26% of its electricity generation to come from wind and solar generation, as the majority currently comes from coal. Thereis thus significant potential for the South Africa’s green bond market to develop and we hope Nedbank increases thevisibility of green finance in the country, especially as a well-known financial institution.

New issuers
Bank of Jiangsu (CNY10bn/USD1.5bn), China, has made its market debut with a 3-year green bond, which will finance 89
projects related to energy production, buildings, clean transport, water/wastewater and waste management, several ofwhich have a component of adaptation. The issuer has provided a detailed list of projects which includes the project’s
name, location and amount to be raised via the green bond.
A third-party agency will confirm the projects’ expenditures and associated environmental benefits. Bank of Jiangsu will
disclose the use of proceeds on a quarterly basis and will provide an annual green bond report by 30 April 2020.

Climate Bonds view: It’s always positive to see new issuers, including financial corporates which have the power to deliverlarge impacts by simultaneously funding many projects, as in this case. Some projects are fossil fuel-based, but they only
represent 1.8% of proceeds which falls within our 5% limit, so the bond is included in our database.

City of Starkville (USD10m), USA, issued a 20-year green bond to finance improvements to water and sewer services
provided to residents of the Municipality and some outside its incorporated area. The bond was independently reviewed
under the BAM GreenStar Assessment. The City has agreed to provide annual information to BAM regarding the status of
the project until completion, which will be reflected in BAM’s Credit Profile for the bond.
Climate Bonds view: As the US Muni green bond market continues to expand, the BAM GreenStar Assessment has
increasingly been provided as an external review for bonds issued by entities active in the water and/or wastewater
management in the USA. BAM is a CBI Approved Verifier.

La Banque Postale (EUR750m/USD841m), France, issued a debut 10-year green bond to finance/refinance 47 loans
dedicated to renewable energy projects. The initial EUR1.2bn renewables portfolio identified by the bank is split 55/45
between wind and solar projects. According to Carbone 4, the environmental consultancy which advised on the issuer’s
framework, their capacity is equivalent to an estimated 35,800 tonnes of CO2 avoided per year.
As stated in its Green Bond Framework and Vigeo Eiris SPO, La Banque Postale will provide annual reports until bondmaturity, including information on allocation of proceeds and environmental impacts at an aggregate category level.
Climate Bonds view: La Banque Postale’s green bond issuance follows La Poste’s – its parent group – which debuted inlate 2018. Unlike other French financial sector issuers, La Banque Postale is ultimately state-owned and adds to the rosterof sovereign, subsovereign and agency (SSA) deals, which is very welcome.

Royal Bank of Canada (EUR500m/USD560m), Canada’s largest bank, made its market debut by issuing a 5-year seniorunsecured green bond. The issuer’s Framework (reviewed by Sustainalytics) identifies six project categories. RBC will
provide annual reports containing information regarding allocation and impacts until maturity.
Climate Bonds view: This is the first issuance from a Canadian bank in 2019, and the second from the sector, following TD
Bank’s two green bonds. Large financial institutions have the power to considerably scale up financing to green projects
and this deal should help propel more issuance from North American financial institutions. Our Canada green finance stateof the market report from earlier this year profiles this market and its possibilities.

Sunseap Group (SGD50m/USD37m), Singapore, obtained its first green loan, with ING as the sole lender. The proceeds
will finance a portfolio of approx. 50MW of rooftop solar projects, ranging from about 100kW to 5MW in size andbenefitting from long-term PPAs with more than 20 international and domestic commercial and industrial corporates such
as PSA.
Sunseap Group, which offers clean energy solutions – including financing, designing, installation, and maintenance services– to customers in various Asia-Pacific countries, will publish an annual report with information on allocation andenvironmental impacts.
Climate Bonds view: This marks Singapore's fourth green issuance in 2019, after only four in 2018, demonstrating healthy
growth. It is also the first green loan in the ASEAN region to finance rooftop solar projects and ING’s first transaction
financing such projects in Asia-Pacific. Whilst it is always positive to see new issuers enter the market, we would also
welcome issuance to finance other types of assets apart from energy and buildings, such as transport, water and waste(given the country’s urban nature).

New issuers issued prior to April 2019
Eólica Mesa La Paz (USD303m), Mexico, issued a 26-year bond in June 2018 to finance the construction of a 306MW
onshore wind farm project, which it operates. Eólica Mesa obtained a E1/91 Green Rating from S&P.

The project consists of 85 turbines in the state of Tamaulipas and is expected to commence operations by September
2019. It will benefit from a 25-year PPA with Fuentes de Energia Peñoles that will ultimately be guaranteed by its parent,
metals producer Industrias Peñoles.
Climate Bonds view: We are pleased to see non-financial corporate issuance growing, especially from EMs. The project fits
well within the Mexican Government’s energy plans, which include increasing electricity generated from clean sources to
35% by 2024 and 50% by 2050, and to reduce GHG emissions by 30% by 2020.

Repeat issuers – April•

ABN Amro: EUR750m/USD848m – Certified Climate Bond•ADIF Alta Velocidad: EUR600m/USD668m•

ADB (Asian Development Bank): SEK500m/USD53m•

African Development Bank (AfDB): SEK1.25bn/USD135m•

Arizona State University: USD125m•

Atrium Ljungberg: SEK500m/USD54m•

CDL Properties: SGD100m/USD74m•

CDL Properties: SGD400m/USD295m•

Fabege AB: SEK400m/USD43m•

IFC: EUR18m/USD20m•

IFC: EUR113m/USD126m•

Interstate Power and Light Company: USD300m•

Jernhusen AB: SEK1.5bn/USD161m•

Klabin: USD500m•

Landwirtschaftliche Rentenbank: SEK2bn/USD216m•

LCDA (Louisiana Community Development Authority): USD10.4m•

Link REIT: HKD4bn/USD510m (convertible)•

Nedbank: ZAR1.66bn/USD116m – Certified Climate Bond•

Reykjavik Energy: ISK2.11bn/USD18m•

SNCF: EUR250m/USD282m (tap) – Certified Climate Bond (Programmatic Certification)•

SNCF: EUR100m/USD112m (tap) – Certified Climate Bond (Programmatic Certification)•

Société du Grand Paris: EUR70m/USD79m – Certified Climate Bond (Programmatic Certification)•

Société du Grand Paris: EUR55m/USD62m – Certified Climate Bond (Programmatic Certification)•

Sogn og Fjordane Energi: two bonds, each NOK200m/USD23m•

Terna: EUR500m/USD562m•

Toyota Finance: JPY60bn/USD536m•

World Bank: EUR250m/USD281m•

World Bank: AUD200m/USD154m (tap)Repeat issuers accounted for 54% of issuance in April

0

1

2

3

ABN Amro
Toyota Finance Corporation
Interstate Power and Light Company
World Bank
AfDB
Nedbank
ADB
Reykjavik Energy

4

5

6

7

ADIF Alta Velocidad
Link REIT
CDL Properties
Landwirtschaftliche Rentenbank
IFC
Société du Grand Paris
Fabege AB
LCDA

8

9

10

11

12

USD Billions

Terna
Klabin
SNCF
Jernhusen AB
Arizona State University
Atrium Ljungberg
Sogn og Fjordane Energi
New issuers

Pending and excluded bonds
We only include bonds with at least 95% proceeds dedicated to green projects that are aligned with the Climate Bonds
Taxonomy in our green bond database. Although we support the Sustainable Development Goals (SDGs) overall and see
many links between green bond finance and specific SDGs, in particular SDGs 6, 7, 9, 11, 13, 14 and 15, the proportion ofproceeds allocated to social goals should be no more than 5% for inclusion in our database.
Issuer Name

Amount issued

Issue dateReason for exclusion/
pending

Government of Navarre

EUR50m/USD56m

30/04/2019

Excluded (sustainability bond)Indorama Ventures Public USD100m
Company Limited (x2)
EUR100m/USD112m

29/04/2019

Excluded (Impact/ESG loan)

Chengdu Xingrong
Environment Co., Ltd.

CNY800m/USD119m

29/04/2019

Excluded (working capital)

Yangzhou Green Industry
Investment Development
Holding (Group) Co., Ltd.

CNY1bn/USD149m

24/04/2019

Excluded (working capital)

Huaneng Tiancheng

CNY500m/USD75m

19/04/2019

Excluded (working capital)

Qingdao Metro Group

CNY1bn/USD149m

19/04/2019

Excluded (working capital)

Shenzhen Energy Nanjing
Holding Co., Ltd.

CNY1bn/USD149m

29/04/2019

Pending (waiting for more
information)

Midsummer AB

SEK200m/USD21m

25/04/2019

Pending (waiting for more
information)

ICBC (x4)

USD600m, USD900m,
EUR500m/USD557m,
CNY1bn/USD148m

25/04/2019

Pending (waiting for more
information)

Green bonds in the market•

Republic of France: EUR1.89bn (tap) – closed May 6•

California Infrastructure and Economic Development Bank: USD84m – closing May 9•

Majid Al Futtaim: USD600m – closing May 14•

Lidl Austria: CHF300m (3 tranches, each 100m) – closing May 15•

Dutch State Treasury Agency: EUR4-6bn – Certified Climate Bond – closing May 23•

United Urban Investment Corporation: JPY10bn – closing May 23•

New Jersey Infrastructure Bank: closing May 23•

New Jersey Infrastructure Bank: closing June 6•

UGE International: multiple closings

Investing News
Europe’s top markets and insurance regulators have proposed amendments to the EU’s financial regulations that will pushbanks, investment firms and insurers to consider the impact of sustainable finance when offering products to customers.
The UK Parliament recently declared a climate emergency. The Committee on Climate Change added that the UK should
achieve net-zero carbon emissions by 2050, although red tape is still holding back the development of renewables.
Investors are now calling for green gilts.
Hong Kong’s Government has become the first Asian signatory to the Green Bond Pledge as it attempts to green its
financial sector. The Hong Kong Monetary Authority (HKMA) also announced it has launched new measures to promote
green finance, echoing China’s plan to support Hong Kong in becoming a green finance hub for the Greater Bay Area.
At a time when many central banks are increasingly looking for ways to address climate risks, the US’s Fed Chairman
Jerome Powell has stated the Fed is taking steps in the same direction. However, the announcement lacked concretemeasures. The Fed was one of the few large central banks that did not join the Network for Greening the Financial System.
The success of the Spanish Socialist Workers’ Party in the recent general election is likely positive for Spain’s climate action
programme and may support the potential issuance of a debut sovereign green bond from the country.
Franklin Templeton, the asset management firm, has launched what it claims is the first actively-managed EUR green bondETF. Its Franklin Liberty Euro Green Bond UCITS ETF will reportedly invest at least 70% of its net assets in green-labelledbonds, with the balance made up of unlabelled 'climate-aligned' bonds.
27 firms from around the world, including large banks such as Crédit Agricole, Deutsche Bank and UBS, have backed a setof Green Investment Principles (GIPs) that aim to incorporate low carbon development into projects in the Belt and Road
countries. The region represents approximately 40% of the Earth's land area and 55% of CO2 emissions.
EIB is reportedly planning to launch a new development bank – tentatively called the European Bank for Sustainable
Development – aimed at financing projects outside the EU. Its creation would effectively transfer EIB’s non-EU business toa new entity that will focus on financing sustainable projects.
Several investors have welcomed the announcements by chemicals giant BASF and German utility RWE to review theirlobbying activities on climate change. The moves come in response to investor pressure as part of the Climate Action 100+collaborative engagement initiative, and as the discussion around the role of green bonds in the transition to a low carbon
economy intensifies.

Green Bond Gossip
In line with its objective to become a green finance hub in Asia, Hong Kong is planning to issue its first sovereign green
bond in the coming weeks as part of its HKD100bn (USD13bn) green bond programme.
Following Chile’s announcement of a potential first sovereign green bond from Latin America, Peru could become the next
country in the region to issue one, although there are no firm plans to do so yet.

The New Mexico Finance Authority announced plans to issue roughly USD12m in green bonds to complete efficiency andrenewable energy upgrades on several state buildings in Santa Fe.
Dutch bank De Volksbank is preparing to issue green bonds to finance green buildings and/or energy efficiency projects. It
has received pre-issuance Certification under the Climate Bonds Standard and obtained an SPO from ISS-oekom.
Orsted, a Danish power company, is planning to issue its third green bond in GBP. It debuted in late 2017 with a deal
comprising two green bonds. The proceeds will finance an offshore wind farm.
Hemfosa Fastigheter AB, a Swedish real estate company, has announced intentions to issue a debut green bond.
Värmevärden, a Swedish district heating firm providing energy services to commercial and residential customers, hasdeveloped a green finance framework, under which it is planning to issue green bonds and/or loans.
Pakistan’s Water and Power Development Authority (WAPDA), a state-run utility, aims to issue up to USD500m of green
bonds to fund two long-stalled hydro projects. WAPDA has planned four to five bond tranches, tapping the market with
about USD100m each year for the next five-year period.
India’s Azure Power and Hero Future Energies, both repeat issuers and renewable energy producers, are each looking toraise about USD500m through the sale of green bonds to overseas investors.

Readings & Reports
Partnering with several other organisations, the International Union for the Conservation of Nature (IUCN) has released areport on blue bonds and how to increase financing for coastal resilience. It comes as the Asian Development Bank
launches a USD5bn Action Plan for Healthy Oceans and Sustainable Blue Economies for the Asia-Pacific region.
C40 Cities has partnered with the Overseas Development Institute (ODI) to look at how green city projects can be fundedat the required scale. The paper Financing the Sustainable Urban Future: Scoping a Green Cities Development Bank calls forthe creation of a new institution, combining elements of development banks with the green bank model.
Amundi has released a report focusing on the growth potential of emerging market green bonds, highlighting that capitalflow from developed to emerging markets has a critical role to play in addressing climate change. Amundi estimates thatthe outstanding volume of green bonds could increase from the current USD136bn to USD210-250bn by 2021.
In their joint report Assessing physical risks of green bonds: a case study, Swiss environmental consultancy South Pole andLondon-based Affirmative Investment Management assessed potential threats to a green bond issuer’s ability to produce
goods or services, create value and generate revenue as a result of the physical impacts of climate change. One of themain conclusions is that green bond issuers should improve reporting on how they plan to adapt to potential physical risks
posed by climate change, given the low level of disclosure of such risks that was found.
The IFC’s recent Creating Impact: The Promise of Impact Investing study has estimated that as much as USD26tn from bothpublic markets and private sources is available for impact investing globally, although multiple key challenges remain.
Through its Insurance AM Survey 2019, Goldman Sachs Asset Management has found that only 5% of insurers globallyconsider ESG and/or impact investing a primary investment consideration, with 57% regarding it as one of several. There
are significant differences by region, although the apparent lack of consistent definitions of ESG investing may be an issue.
A substantial and growing share of asset managers are asking that big oil companies realign their businesses with the Paris
Agreement by moving away from fossil fuels, a new survey has found. Although oil companies may no longer appeal toinvestors unless they adopt different business models, few asset managers have set deadlines or thought about how they
will tackle the problem if oil companies fail to comply.

Upcoming events
Two big conferences coming up in London for green finance and sustainable investment aficionados. Responsible
Investor’s RI Europe Conference 11th -12th June and Environmental Finance’s ESG in Fixed Income featuring Green Bonds
Europe on 17th June. Pick one or go to both.

‘Till next time,Climate Bonds

Disclosure: Some of the organisations mentioned in this communication are Climate Bonds Partners. A list of Partners isavailable here.

Disclaimer: The information contained in this communication does not constitute investment advice in any form and the Climate
Bonds Initiative is not an investment adviser. Any reference to a financial organisation or debt instrument or investment productis for information purposes only. Links to external websites are for information purposes only. The Climate Bonds Initiative
accepts no responsibility for content on external websites.
The Climate Bonds Initiative is not endorsing, recommending or advising on the financial merits or otherwise of any debt
instrument or investment product and no information within this communication should be taken as such, nor should any
information in this communication be relied upon in making any investment decision.
Certification under the Climate Bond Standard only reflects the climate attributes of the use of proceeds of a designated debt
instrument. It does not reflect the credit worthiness of the designated debt instrument, nor its compliance with national orinternational laws.
A decision to invest in anything is solely yours. The Climate Bonds Initiative accepts no liability of any kind, for any investment an
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