EIB’s new sustainable bond includes biodiversity protection
The €1.5bn bond, due on 15 May 2041, was 15 times oversubscribed, with the demand exceeding €22.5bn. The transaction was upsized from its initial target size of €1bn and priced at mid-swaps less 7bp, 2bp tighter than initial guidance. The issue had a re-offer yield of -0.003%, offering a spread of 30.6bp over German government bond (DBR) 4.75% 07/04/40 and 6.3bp below French Treasury issued OATs (Obligations assimilables du Trésor) (FRTR) 4.5% 25/04/41.
Funding raised from global capital markets by the EIB Sustainability Awareness Bond (SAB) will support long-term investment in projects in alignment with the EU Taxonomy Regulation. Ahead of the Taxonomy Regulation, the bond has enabled investors to support Covid-related financing, in addition to projects that increase access to water, health and education using transparent screen criteria mentioned under the EU framework.
The EIB has added protection and restoration of biodiversity and ecosystems to its scope, following the recent One Planet Summit conference in Paris. “EIB’s Sustainability Awareness Bonds are allocated only to environmental and social projects with substantial contribution to EU sustainability objectives. In 2018, EIB was the first issuer to align documentation with EU legislation on sustainable finance. Eligibility is now extended to Biodiversity. This is a major commitment to transparency to investors in one of the most important areas of engagement for the EU and the EIB,” said Ricardo Mourinho Félix, vice-president of the EIB.
The extended scope starts off with sustainable forest management and will expand into relevant areas such as nature and biodiversity conservation, sustainable land use and management, sustainable agriculture practices, among other things. EIB has so far raised approximately over €14.6bn (24%) out of the announced €60bn 2021 borrowing programme. The issuance of this bond grew by five times in 2020 compared to 2019, indicating a favourable demand in the market.