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Green Bonds on London
Stock Exchange
Page 1
What is a Green Bond?
•
Green bonds are any type of bond instrument where the proceeds will be exclusively applied to finance or re-finance in part or in full
new and/or existing eligible ‘green’ projects.
•
The key feature of green bonds is the use of proceeds, which are described in the bond’s legal documentation, separately managed
within the company, as well as monitored and reported throughout the life of the instrument.
•
Categories of potential eligible green projects include:
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renewable energy
energy efficiency
sustainable waste management
sustainable land use
biodiversity conservation
clean transportation
climate change adaption, etc.
A growing market
•
With growing investor emphasis on sustainability, green bonds are
one of the fastest growing market segments internationally.
•
$36.5bn of green bonds were issued in 2014, almost tripling
2013 total green bond issuance.
•
A record of $41.8bn green bonds were issued in 2015 making it
the biggest year ever for green bonds.
•
As of April 2016, $16.8bn green bonds were issued globally1
Source: Climate Bonds Initiative
1
Source: Bloomberg
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Green bonds geography
•
The green bond market expanded further in 2015, thanks to a wider range of issuers and types of green assets, as well as new
geographies.
Source: Climate Bonds Initiative
Page 4
A diversified issuer base
• The UK, China, Germany, Japan, the Netherlands, Norway
• 2015 saw a wider range of issuers and types of green
and the US have shown significant growth in green bond
projects or assets. There was a widening of the type of
market size last year.
projects financed by green bonds with more proceeds
leveraged for other green sectors outside of the renewable
• Overall Europe remains the region hosting most green bonds,
sustainable water.
with nearly USD 18.4 billion issued in 2015
Country
Amount ($)
Country
Amount ($)
USA
10bn
UK
0.7
Germany
5.6bn
Denmark
0.6
Netherlands
4.1
Brazil
0.6
India
1.1
Mexico
0.5
China
1
Japan
0.5
Norway
0.9
Hong Kong
0.3
Source: Climate Bonds Initiative
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energy space, in particular low carbon transport and
LSEG and Green Financing
•
LSEG is a partner exchange of the United Nations Sustainable Stock Exchanges (SSE) initiative.
•
London Stock Exchange Group’s activity in green financing is focussed on two key areas: fixed income products and information
services/indices. Through a range of new initiatives, LSEG intends to broaden its offering and support London in becoming the
preferred listing venue for debt and equity Low Carbon Economy (LCE) financial instruments.
•
Through its FTSE Russell business, LSEG is looking at further opportunities to increase transparency in the green bond market, by
providing issuers with a more efficient tool to report on sustainable initiatives, and offering investors a comprehensive product to
assess a wide range of financial instruments against an innovative Low Carbon Economy (LCE) framework.
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Green Bonds on London Stock Exchange
•
LSEG has welcomed 29 green bonds to its markets denominated in 7 different
currencies, which have raised approximately $6 billion equivalent.
•
In 2015, 12 green bonds were listed on LSE – this translated to a 14.5% market
share of total green bond on EEA exchanges.
•
London Stock Exchange has launched a range of dedicated ‘green bond’
segments, offering issuers a flexible range of market models, covering both
Regulated Market (RM) and MTF segments, comprising retail and wholesale,
and offering the choice of trade reporting, end-of-day and continuous quoting.
•
No other global exchange has such a comprehensive specialist offering for green
bonds.
•
Issuers can benefit from the additional transparency of secondary market trading
and global reach of the London markets.
"Together with the London Stock Exchange, UNEP and the Cambridge
Institute for Sustainability Leadership, we hope to impress upon you
London's commitment to build on existing market activity to ensure that
green finance sits right at the very top of the financial industry's agenda.“,
Mark Boleat Policy Chairman of the City of London
Page 7
Green Bonds on London Stock Exchange
London Stock Exchange Green Bond milestones:
•
Dec 2009: first green bond listed by World Bank on London Stock Exchange’s markets
•
Mar 2014: International Finance Corporation (IFC) issues the first Renminbi-denominated green bond, raising RMB 500 million. This
set the precedent as the first green bond issued by a multilateral institution in the offshore Chinese markets.
•
May 2014: London Stock Exchange Group joins UN’s Sustainable Stock Exchanges (SSE) initiative.
•
Apr 2015: Transport for London lists its debut green bond, raising £400 million, to improve sustainability of London transport network.
•
Jun 2015: London Stock Exchange expands its range of dedicated green bond segments to offer increased flexibility for issuers
•
Aug 2015: IFC issues the first offshore Indian Rupee denominated green bond, raising INR 3.15 bn.
•
Oct 2015: Agricultural Bank of China lists a $1bn triple tranche, dual currency green bond, the largest green issue on London Stock
Exchange’s markets.
•
Nov 2015: London Stock Exchange becomes an Observer to the internationally-recognised Green Bond Principles guidelines
•
Jan 2016: LSEG joins the Green Infrastructure Investment Coalition (GIIC). The coalition was launched at COP21 by alliance of
global investors, development banks, financial sector associations & NGOs. Its aim is to support the financing of a rapid transition to a
low-carbon and climate resilient economy.
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Jan 2016: LSEG joins the City of London's Green Finance Initiative run in partnership with HMT and the Department of Energy and
Climate Change.
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How to list Green Bonds
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Green bonds have the same regulatory status of equivalent “non-green” bonds and can normally be issued through standard base
prospectuses.
•
To admit green bonds to London Stock Exchange’s dedicated Green Bond segments, issuers are required to provide the Exchange
with the relevant “second opinion” document that certifies the ‘green’ nature of the bonds.
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The choice of the certification provider is up to the issuer and its advisers. London Stock Exchange has outlined guidance on a set of
criteria that the certifier should meet in order for the certified instruments to be included in the relevant LSE green bond segment.
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Green Bonds Certification
Issuers admitting bonds to the green bond segments on London Stock Exchange must provide a third party certification that the
instruments are considered “green bonds” and a written confirmation that the entity that has been appointed to conduct the green bond
certification meets the following criteria:
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Be a legal entity with a registered office in the European Economic Area or Switzerland and that such entity have the required
financial resources to conduct the verification.
•
Be independent of the entity issuing the bond, its directors, senior management and advisers. In particular, the organisation providing
the second opinion must not be a subsidiary or owner, either in full or in part, of the entity issuing the bond.
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Be remunerated in a way that prevents any conflicts of interests arising as a result of the fee structure.
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Have the required financial resources to conduct the verification.
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Be an entity* specialising in assessing the framework of the bonds’ environmental objectives, with sufficient financial and marketspecific expertise to perform a comprehensive assessment of the use of proceeds. Such expertise could be demonstrated for
example by:
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Affiliation with relevant and widely recognized industry bodies
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Significant and appropriate previous experience in providing second opinions on green bonds
*e.g. a research organisation or a certification company, or an entity of which one of its departments offer services in the relevant certification industry
Page 10
Green Bonds on London Stock Exchange
Green Bonds Listed on London Stock Exchange dedicated Green Bond Segments and Sectors
ISIN
Issuer Name
Coupon(%)
Currency
Amount
Raised
Issue Date
Maturity
Date
Segment
Sector
US45950VJC19
International Finance Corporation
4.75
MXN
500,000,000
29/04/2016
29/04/2021
PSTR
UIDP
US45950VHX73
International Finance Corporation
2.125
USD
7,000,000
07/04/2015
07/04/2026
PSTR
UIDP
US45950VHE92
International Finance Corporation
1.25
USD
500,000,000
27/11/2015
27/11/2018
PSTR
UIDP
HK0000270386
Agricultural Bank of China
4.15
CNY
600,000,000
20/10/2015
20/10/2017
CWTU
UICU
XS1308276168
Agricultural Bank of China
2.125
USD
400,000,000
20/10/2015
20/10/2018
CWTU
UICU
XS1303791336
Agricultural Bank of China
2.75
USD
500,000,000
20/10/2015
20/10/2020
CWTU
UICU
US45950VGQ32
International Finance Corporation
6.45
INR
3,150,000,000
10/08/2015
10/08/2020
PSTR
UIDP
XS1253847815
City of Gothenburg Sweden
1.455
SEK
1,050,000,000
30/06/2015
30/06/2021
PSTR
UIDP
XS1238024035
Shanks Group PLC
3.65
EUR
100,000,000
16/06/2015
16/06/2022
PSTR
UIDP
XS1080036939
International Finance Corporation
2
CNY
500,000,000
26/06/2014
26/06/2017
PSTR
UIDP
XS1222743061
Transport for London
2.125
GBP
400,000,000
24/04/2015
24/04/2025
PSTR
UIDP
XS1048655184
Unilever PLC
2
GBP
250,000,000
26/03/2014
19/12/2018
PSTR
UIDP
XS1073521988
City of Gothenburg Sweden
0.132
SEK
1,500,000,000
03/06/2014
03/06/2020
PSTR
UIDP
XS1073488675
City of Gothenburg Sweden
2
SEK
310,000,000
03/06/2014
03/06/2020
PSTR
UIDP
XS0976165828
City of Gothenburg Sweden
0.279
SEK
250,000,000
03/10/2013
03/10/2019
PSTR
UIDP
XS0976166719
City of Gothenburg Sweden
2.915
SEK
250,000,000
03/10/2013
03/10/2019
PSTR
UIDP
Data as at 26th April 2016
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Green Bonds on London Stock Exchange
Self-labelled Green Bonds listed on London Stock Exchange markets
ISIN
XS1399311064
Issuer Name
Nordic Investment Bank
Coupon(%)
Currency
Amount
Raised
Issue Date
Maturity
Date
Segment
Sector
0.5
SEK
700,000,000
26/04/2016
26/04/2021
CWNR
EIDW
XS1292474282
Nordic Investment Bank
0.375
EUR
500,000,000
17/09/2015
09/19/2022
CRNR
EIDR
XS1239582684
Stockholm Lans Landsting
0.12
SEK
300,000,000
28/05/2015
28/05/2021
CWNR
EIDW
XS1239582502
Stockholm Lans Landsting
1
SEK
1,500,000,000
28/05/2015
28/05/2021
CWNR
EIDW
XS1222727536
Nordic Investment Bank
0.155
SEK
1,000,000,000
23/04/2015
23/04/2020
CWNR
EIDW
XS1117504750
Development Bank of Japan
0.25
EUR
250,000,000
07/10/2014
06/10/2017
CWNU
NIDU
XS1069349089
Stockholm Lans Landsting
2.125
SEK
230,000,000
19/05/2014
19/05/2020
CWNR
EIDW
XS1069348941
Stockholm Lans Landsting
0.106
SEK
870,000,000
19/05/2014
19/05/2020
CWNR
EIDW
XS1031495929
Nordic Investment Bank
Fltg
EUR
40,000,000
11/02/2014
11/02/2019
CWNR
EIDW
XS0975173633
Nordic Investment Bank
2.413
SEK
500,000,000
27/09/2013
27/09/2018
CWNR
EIDW
US29874QCN25
European Bank of Reconstruction
& Development
1.625
USD
250,000,000
17/09/2013
10/04/2018
CWNR
EIDW
XS0824127277
Nordic Investment Bank
2.75
SEK
500,000,000
07/09/2012
07/09/2032
CWNR
EIDW
Data as at 26th April 2016
Page 12
Green Bonds on Italian MOT
Green Bonds listed on Borsa Italiana MOT markets
ISIN
Issuer
Description
Coupon (%)
Currency of
Issue
Issue Date
Maturity
Market
XS1233613188
IBRD
Notes Linked to the Ethical Europe
Equity Index due July 5, 2023 - Green
Growth Bonds
Floating –
Index linked
USD
28/07/2015
05/07/2023
MOT
XS1198278175
EIB
8.50 per cent. Climate Awareness Bonds
due 27th March, 2019
8.5
TRY
27/02/2015
27/03/2019
MOT
XS1107247725
EIB
1.75 per cent. Eurocooperation (Ecoop)
Bonds due 15th September, 2045
1.75
EUR
09/08/2014
15/09/2045
MOT
XS1247736793
EIB
0.875 per cent. Eurocooperation (Ecoop)
Bonds due 13 September 2024
0.875
EUR
17/06/2015
13/09/2024
MOT
XS1260085037
EIB
0.125 per cent. Eurocooperation (Ecoop)
Bonds due 15 June 2020
0.125
EUR
14/07/2015
15/06/2020
MOT
XS1183208328
EIB
1.00 per cent. Eurocooperation (Ecoop)
Bonds due 14 March 2031
0
EUR
05/02/2015
14/03/2031
MOT
XS1271698612
EIB
0.375 per cent. Eurocooperation (Ecoop)
Bonds due 15 March 2022
0.375
EUR
08/05/2015
15/03/2022
MOT
Data as at 14th April 2016
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Case Studies
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Case Study
Using Green offshore rupee bond issuance to finance Indian
infrastructure
Company Details
Company
International Finance Corporation
(part of World Bank Group)
Market
Main Market
Sector
Supranational
Rating
AAA/Aaa
Company profile
 IFC is one of the world’s largest financiers of
climate-smart projects for developing countries,
investing about $11 billion in long-term financing
over the last decade for renewable power,
energy efficiency, sustainable agriculture, green
buildings and private sector adaptation to climate
change.
 “Addressing climate change is a priority for IFC in
India. IFC’s green Masala bond demonstrates
the powerful role of capital markets in mobilizing
savings for climate finance—and a listing in
London allows us to attract the widest possible
range of international investors. Adding the rupee
as a new green bond currency also supports our
goals to strengthen this important asset class.”
Source: IFC press release, LSEG database, August 2015
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Transaction Details
Issue Date
10 Aug 2015
Issue Size
INR 3.15billion
Yield at issue
6.45%
Maturity
5 years
Debt issuance story
 Sole arranger: JP Morgan
 Proceeds from the offering used to finance a
green bond issued by Yes Bank, one of India’s
largest commercial banks. Yes Bank invested the
proceeds of its bond in renewable energy and
energy efficiency projects, mainly in the solar and
wind sectors.
 Under its $3 billion offshore rupee Masala bond
program, IFC has issued bonds worth over 103
billion rupees ($1.66 billion) in a range of tenors,
building a triple-A yield curve and attracting new
investors to the London offshore rupee market.
Case Study
Using Green offshore renminbi bond issuance to finance Chinese
climate-friendly investments
Company Details
Company
International Finance Corporation
(part of World Bank Group)
Market
Main Market
Sector
Supranational
Rating
AAA/Aaa
Company profile
 IFC is one of the world’s largest financiers of
climate-smart projects for developing countries,
investing about $11 billion in long-term financing
over the last decade for renewable power, energy
efficiency, sustainable agriculture, green buildings
and private sector adaptation to climate change.
 “IFC is committed to supporting the development of
China’s capital markets, which are key to creating
access to finance for the private sector and
especially small and medium businesses. We will
continue to seek opportunities to help deepen
liquidity and extend the yield curve for offshore
renminbi assets. The addition of the renminbi as a
new green bond currency also supports our goals to
strengthen this important asset class.”
Source: IFC press release, LSEG database, June 2014
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Transaction Details
Issue Date
17 Jun 2014
Issue Size
RMB 500 million
Yield at issue
2.00%
Maturity
3 years
Debt issuance story
 Sole arranger: HSBC
 Proceeds from the offering to support projects to
reduce greenhouse gas emissions—for example,
by rehabilitating power plants and transmission
facilities, installing solar and wind power, and
providing financing for technology that helps
generate and use energy more efficiently.
 In March 2014, IFC became the first multilateral
institution to list renminbi-denominated bonds on
LSE, raising 2 billion renminbi from international
investors. IFC was also the first to set up a
program to regularly issue offshore renminbidenominated discount notes.
Case Study
Using Green offshore dual currency bond issuance to finance
green projects
Company Details
Company
Market
Agricultural Bank of China
Issue Date
20 Oct 2015
Issue Size
$400 million / $500 million /
RMB 600 million
PSM
Sector
Financials
Rating
A1/A
Company profile
 Agricultural Bank of China is one of the top four
commercial banks in China. ABC is one of the first
standing members of the green finance committee
of China Society for Finance and Banking. In 2013,
ABC signed the green credit commitment along with
other financial institutions, and formulated green
credit standards and protocols.
 “The successful issuance and listing of ABC’s green
bonds on the London Stock Exchange not only fulfils
our ambition that was announced as part of the
policy outcomes of the latest UK-China Economic
and Financial Dialogue, but also manifests the close
and fruitful cooperation between Chinese and UK
financial institutions on green finance, climate
change and adaption initiatives.”
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Transaction Details
Yield at issue
2.125% / 2.75% / 4.15%
Maturity
3 years / 5 years / 2 years
Debt issuance story
 Joint Leads: ABC, BAML, Barclays, GS HSBC,
JPM, MS, SCB, Wells Fargo
 Based on the green bond management framework,
the proceeds from the offering will support
renewable energy, energy efficiency, sustainable
waste management, sustainable use of land, clean
transportation and sustainable water management.
 The listing is the first international Green Bond
issue by a Chinese bank, as well as the first listed
Green RMB bond for ABC on the London Stock
Exchange.
Case Study
Using Green bond issuance to finance green Railway projects
Transaction Details
Company Details
Transport for London
Issue Date
24 Apr 2015
Market
Main Market
Issue Size
£400 million
Sector
Government
Yield at issue
Rating
AA+/Aa2/AA
Maturity
Company
Company profile
 Transport for London (TfL) is the owner and
operator of the largest integrated transport
networks in Europe. TfL is a statutory corporation
and is a functional body of the Greater London
Authority (GLA)
 UK's leading public sector issuer of capital
markets debt after the UK Government's Debt
Management Office with around £8.5bn of
borrowings raised from a variety of sources and
a further £4.5bn borrowing requirement up to
2021
 TfL was the first UK corporate to issue sterling
denominated Green bonds
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2.125% (G10yr+57bp)
10 years
Debt issuance story

Joint Lead Managers: Deutsche Bank, Bank
of America Merrill Lynch (BoAML)
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Third Party opinion provided by DNV GL

Proceeds will support the objectives of TfL’s
corporate environmental framework, which
includes reducing air pollution in the city,
improving natural resource management and
preparing for potential climate change effects

Deutsche Bank also publicly announced that
will invest in the bond, which the Bank will
hold within its Green Liquidity Portfolio
Case Study
Using Green Bond issuance to tap into retail investor liquidity
Company Details
Transaction Details
Company
Shanks Group plc
Issue Date
16 Jun 2015
Market
Main Market (LSE)
Issue Size
€100 million
Sector
Waste & Disposal Services
Rating
n/a
Company profile
 Shanks Group is a leading international waste to
product business
3.65%
Maturity
7 years
Debt issuance story

Lead Managers: BNP Paribas, KBC Bank

Shanks is the first UK company to issue Green
Bonds in Euros and list them on LSE

The net proceeds of the issue will be used to
finance Shanks' ongoing programme of
investment in sustainable infrastructure.

Minimum Denomination: €1000
 Company was founded in 1880 as a construction
company operating primarily in the West of
Scotland under the name of Shanks & McEwan
 Listed on London Stock Exchange’s Main Market
since 1988
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Yield at issue
Case Study
Using sustainability bond issuance to tap into ESG
investors liquidity pool
Transaction Details
Company Details
Development Bank of Japan
Issue Date
21 Oct 2015
Market
PSM
Issue Size
EUR 300 million
Sector
Government
Rating
A1/A
Company
Press Release
 “DBJ successfully took in new investors by
broadening the asset classed applicable for the new
issue’s use of proceeds.” Goldman Sachs
 “Following the issuance of the DBJ’s first Green Bond
last year, this inaugural Euro denominated
sustainability bond has positioned the bank as a
clear leader in the rapidly growing SRI fixed income
market. At the same time it enabled the bank to reach
a more diversified investor base including SRI
focused investors” BAML
 “The transaction attracted both new and existing DBJ
green and sustainability investors, all while achieving
a competitive pricing outcome” JPMorgan
Source: DBJ press release, LSEG database
Page 20
Yield at issue
0.375%
Maturity
4 years
Debt issuance story
 Joint Leads: Merrill Lynch International, Morgan
Stanley & Co. International, JPMorgan
Securities, Goldman Sachs International.
 This bond is the first sustainability bond issued
by a Japanese issuer. DNJ has expanded the
use of proceeds to include DBJ Environmentally
Rated Loan Program in addition to DBJ Green
Building Certification.
 On 7 Oct 2014, DBJ issued its first Green Bond
on London Stock Exchange.
Distribution by Investor Type
Banks
61%
Asset Manager
13%
Insurance
11%
Central Banks
7%
Others
8%
Geographical Distribution
EMEA
97%
US Offshore
3%
Case Study
Using Green Bonds to expand private investors product
range
Company Details
Company
Transaction Details
World Bank
Issue Date
29 Jun 2015
Market
MOT (Borsa Italiana)
Issue Size
$84 million
Sector
Supranational
Rating
AAA/Aaa/AAA
Company profile
 World Bank provides low-interest loans and grants
to developing countries. These support a wide
array of investments in such areas as education,
health, infrastructure, and environmental and
natural resource management
 Established in 1944, the World Bank Group is
headquartered in Washington, D.C and employs
more than 10,000 employees worldwide
 Since its first green bond launched in 2008, the
World Bank has issued 100 green bonds in 18
currencies, totalling over USD 8.4 billion
equivalent
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Coupon
Linked to Ethical Equity Index
Maturity
8 years
Debt issuance story





Lead Manager: BNP Paribas
The bonds were distributed to Italian retail
investors through a network of 16 retail banks
and brokers
The issue is part of the World Bank’s Green
Growth Bond programme for issuance of retail
instruments in the US and a number of European
markets
Minimum denomination: $2000
Bond performance is fixed for the first two years
(1.75% coupon) and then linked to the
performance of the Ethical Europe Equity Index.
Redemption at maturity (100) guaranteed by the
World Bank
Contact us
Fixed Income
London Stock Exchange
Mail: [email protected]
Tel: +44 (0)20 7797 3921
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