Norway’s DNB Boligkreditt issued the biggest green bond from a European bank yesterday (Tuesday), a EUR1.5bn green covered bond debut that provided the clearest evidence yet of a possible “greenium” in the asset class. Sweden’s Handelsbanken today unveiled a new “dark green” framework.
In some asset classes, such as senior unsecured debt, green bonds have been deemed able to in some circumstances achieve tighter pricing than conventional bonds in the primary market – even if the evidence is inconclusive – but in the euro covered bond market – where four green benchmarks had been priced prior to DNB’s trade – green deals have tended to be priced in line with conventional comparables, although compressed spreads resulting from the ECB’s asset purchase programme have been deemed a factor in this. Issuers and market participants have instead pointed to benefits of green bonds such as larger demand and greater momentum in bookbuilding.
