Tuesday, 25 June 2019

ADB’s first Green bond

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The Triple A rated Asian Development Bank raised US$500m on March 12 from its inaugural print of Green bonds, giving another boost to the rapidly growing market.

The 10-year bonds priced at 99.294 with a coupon of 2.125% to yield 12.45bp over the February 15 2025 US Treasuries. This was 1bp over mid-swaps, having tightened from initial guidance in the 2bp area.

“I’m extremely happy to see this first Green bond from the Asian Development Bank,” said ADB treasurer Pierre Van Peteghem. “When you look at the mandate of the institution, and its strategic priorities, it just makes sense that we reach out to Green bond investors to enlarge our investor base and refinance the operations of the bank.”

Among the buyers, 61% were fund managers, pension funds and insurers, 22% were banks, 16% were central banks and official institutions, while others made up for 1%. Investors from Europe, the Middle East and Africa bought 45% of the bonds, while 31% was placed in Asia and 24% in the Americas.

About 44 investors participated, including AP2, AP3, AP4, Baloise Insurance, Bank Morgan Stanley, Banque Syz & Co, Blackrock, Calvert Investments, Donner & Reuschel Asset Management, Mirova, Nikko Asset Management Europe, Omega Global Investors on behalf of Local Government Super, Praxis Intermediate Income Fund, SEB Wealth, State Street Global Advisors and TIAA-CREF.

“Investing in ADB’s Green bond is a natural way for AP2 to expand our green investments into a region with large environmental challenges and opportunities. Through a first-class organisation, with a well-established Green bond framework and excellent creditworthiness, AP2 feel confident to support ADB in its green efforts,” said Ole Petter Langeland, head of fixed income at AP2.

Proceeds will be used for climate-change-adaptation projects, which could include renewable energy, energy efficiency or sustainable transport initiatives.

Bank of America Merrill Lynch, Morgan Stanley and SEB were joint lead managers.

The ADB has issued US$2.2bn of water and clean-energy bonds since 2010. The bank lends about US$2bn for clean energy projects each year.

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