Green Bonds on London Stock Exchange Page 1 What is a Green Bond? - - PowerPoint PPT Presentation

Green Bonds on London Stock Exchange

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• 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 and which are aligned with the four core components of the Green Bond Principles.

• 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:

What is a Green Bond?

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Renewable Energy Energy Efficiency Eco-efficient products Sustainable Water Management Biodiversity Conservation Clean Transportation Pollution Prevention Sustainable Management Climate Change Adaption

• With growing investor emphasis on sustainability, green bonds are
• ne 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 June 2016, $28.7bn green bonds were issued globally1

A growing market

Source: Climate Bonds Initiative

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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

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A diversified issuer base

• The UK, China, Germany, Japan, the Netherlands, Norway

and the US have shown significant growth in green bond market size last year.

• Overall Europe remains the region hosting most green bonds,

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

• 2015 saw a wider range of issuers and types of green

projects or assets. There was a widening of the type of projects financed by green bonds with more proceeds leveraged for other green sectors outside of the renewable energy space, in particular low carbon transport and sustainable water.

Source: Climate Bonds Initiative

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• 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.

LSEG and Green Financing

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• LSEG has welcomed 34 green bonds to its markets denominated in 7 different

currencies, which have raised approximately $7.5 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.

Green Bonds on London Stock Exchange

"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

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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 first green bond out of China and largest

green issue on London Stock Exchange’s markets.

• Nov 2015: London Stock Exchange becomes an Observer to the internationally-recognised ICMA Green Bond Principles guidelines
• Jan 2016: LSEG joins the Green Infrastructure Investment Coalition (GIIC) which 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.

• 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.

• Apr 2016: London Stock Exchange Group (LSEG) becomes the first global exchange to join the Climate Bonds Partnership Program

Green Bonds on London Stock Exchange

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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.

• 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.

How to list Green Bonds

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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:

• 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.

• Be remunerated in a way that prevents any conflicts of interests arising as a result of the fee structure.
• Have the required financial resources to conduct the verification.
• Be an entity* specialising in assessing the framework of the bonds’ environmental objectives, with sufficient financial and market-

specific expertise to perform a comprehensive assessment of the use of proceeds. Such expertise could be demonstrated for example by:  Affiliation with relevant and widely recognized industry bodies  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

Green Bonds Certification

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ISIN Issuer Name Coupon(%) Currency Amount Raised Issue Date Maturity Date Segment Sector XS1436518606 SBAB Bank AB 0.489 SEK 1,000,000,000 23/06/2016 23/06/2021 PSNR EIDP XS1436728916 SBAB Bank AB FRN SEK 1,000,000,000 23/06/2016 23/06/2021 EIDP EIDP XS1433082861 City of Gothenburg Sweden 0.885 SEK 1,000,000,000 15/06/2016 15/06/2022 PSNR EIDP XS1410341389 Axis Bank Limited 2.875 USD 500,000,000 01/06/2016 01/12/2016 CWTU UICU XS1420355023 Stockholms Lans Landsting 0.75 SEK 1,500,000,000 27/05/2016 27/09/2021 CWNR EIDW XS1402169848 International Finance Corporation 4.75 MXN 500,000,000 29/04/2016 29/04/2021 PSTR UIDP US45950VHX73 International Finance Corporation 2.125 USD 7,000,000,000 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

Green Bonds on London Stock Exchange

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Green Bonds Listed on London Stock Exchange dedicated Green Bond Segments and Sectors

Data as at 22nd June 2016

ISIN Issuer Name Coupon(%) Currency Amount Raised Issue Date Maturity Date Segment Sector XS1239582684 Stockholms Lans Landsting 0.12 SEK 300,000,000 28/05/2015 28/05/2021 CWNR EIDW XS1239582502 Stockholms Lans Landsting 1 SEK 1,500,000,000 28/05/2015 28/05/2021 CWNR EIDW XS1222743061 Transport for London 2.125 GBP 400,000,000 24/04/2015 24/04/2025 PSTR UIDP XS1069349089 Stockholms Lans Landsting 2.125 SEK 230,000,000 19/05/2014 19/05/2020 CWNR EIDW XS1069348941 Stockholms Lans Landsting 0.106 SEK 870,000,000 19/05/2014 19/05/2020 CWNR EIDW 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

Green Bonds on London Stock Exchange

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Green Bonds Listed on London Stock Exchange dedicated Green Bond Segments and Sectors

Data as at 22nd June 2016

Self-labelled Green Bonds listed on London Stock Exchange markets

ISIN Issuer Name Coupon(%) Currency Amount Raised Issue Date Maturity Date Segment Sector XS1431730388 Nordic Investment Bank 0.125 EUR 500,000,000 10/06/2016 10/06/2017 CWNR EIDW XS1347786797 Nordic Investment Bank 0.625 SEK 1,000,000,000 20/01/2016 20/01/2021 CWNR EIDW XS1292474282 Nordic Investment Bank 0.375 EUR 500,000,000 17/09/2015 09/19/2022 CRNR EIDR 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 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

Green Bonds on London Stock Exchange

Data as at 22nd June 2016

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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 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

Green Bonds listed on Borsa Italiana MOT markets

Green Bonds on Italian MOT

Data as at 14th April 2016

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Case Studies

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Company Details

Company International Finance Corporation (part of World Bank Group) Market Main Market Sector Supranational Rating AAA/Aaa

Transaction Details

Issue Date 10 Aug 2015 Issue Size INR 3.15billion Yield at issue 6.45% Maturity 5 years

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

• ver 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.”

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.

Using Green offshore rupee bond issuance to finance Indian infrastructure

Source: IFC press release, LSEG database, August 2015

Case Study

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Company Details

Company International Finance Corporation (part of World Bank Group) Market Main Market Sector Supranational Rating AAA/Aaa

Transaction Details

Issue Date 17 Jun 2014 Issue Size RMB 500 million Yield at issue 2.00% Maturity 3 years

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

• ver 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.”

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 renminbi- denominated discount notes.

Using Green offshore renminbi bond issuance to finance Chinese climate-friendly investments

Source: IFC press release, LSEG database, June 2014

Case Study

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Company Details

Company Agricultural Bank of China Market PSM Sector Financials Rating A1/A

Transaction Details

Issue Date 20 Oct 2015 Issue Size $400 million / $500 million / RMB 600 million Yield at issue 2.125% / 2.75% / 4.15% Maturity 3 years / 5 years / 2 years

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

• f China Society for Finance and Banking. In 2013,

ABC signed the green credit commitment along with

• ther 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

• ur 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.”

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.

Using Green offshore dual currency bond issuance to finance green projects

Case Study

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Company Details

Company Transport for London Market Main Market Sector Government Rating AA+/Aa2/AA

Transaction Details

Issue Date 24 Apr 2015 Issue Size £400 million Yield at issue 2.125% (G10yr+57bp) Maturity 10 years

Company profile

• Transport for London (TfL) is the owner and
• perator 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

Debt issuance story

• Joint Lead Managers: Deutsche Bank, Bank
• f America Merrill Lynch (BoAML)
• 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 finance green Railway projects

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Company Details

Company Shanks Group plc Market Main Market (LSE) Sector Waste & Disposal Services Rating n/a

Transaction Details

Issue Date 16 Jun 2015 Issue Size €100 million Yield at issue 3.65% Maturity 7 years

Company profile

• Shanks Group is a leading international waste to

product business

• 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

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

Case Study

Using Green Bond issuance to tap into retail investor liquidity

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Company Details

Company Development Bank of Japan Market PSM Sector Government Rating A1/A

Transaction Details

Issue Date 21 Oct 2015 Issue Size EUR 300 million Yield at issue 0.375% Maturity 4 years

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

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
• n London Stock Exchange.

Using sustainability bond issuance to tap into ESG investors liquidity pool

Source: DBJ press release, LSEG database

Case Study

Distribution by Investor Type

Banks 61% Asset Manager 13% Insurance 11% Central Banks 7% Others 8%

Geographical Distribution

EMEA 97% US Offshore 3%

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Company Details

Company World Bank Market MOT (Borsa Italiana) Sector Supranational Rating AAA/Aaa/AAA

Transaction Details

Issue Date 29 Jun 2015 Issue Size $84 million Coupon Linked to Ethical Equity Index Maturity 8 years

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

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

Case Study

Using Green Bonds to expand private investors product range

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Disclaimer

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Contact us

Fixed Income Team Lillian Georgopoulou Email: egeorgopoulou@lseg.com greenbonds@lseg.com Tel: +44 (0)20 7797 3482 / +44 (0)20 7797 3921

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