Stockholm (NordSIP) – The Royal Bank of Canada (RBC) issued € 500 million in its inaugural Green bond issuance April 24th. The bonds are senior unsecured notes rated A2, A and AA by Moody’s, S&P and Fitch, respectively. The securities mature in 2024 and pay a 0.25% coupon. This transaction was the first green bond by RBC and the first Euro green bond by a Canadian issuer, according to the issuer.
According to the press release from RBC, “the money raised will fund a portfolio of new and existing assets primarily in the categories of renewable energy and green buildings. Other eligible categories for the allocation of Green Bond proceeds include: clean transportation, sustainable water and wastewater management, environmentally sustainable management of living natural resources and land use, energy efficiency, and pollution prevention and control.”
Books closed at € 3 billion, and the securities were priced at MS+33bps, well below initial price guidance of MS+55bps thanks to demand from 190 accounts. According to RBC, “final pricing represent about 4-5bps saving vs a conventional bond; also the price achieved provided 7-10bp lower all-in cost compared to current USD market.”
“RBC is a purpose-driven organisation, and how we act is just as important as what we achieve,” said Valerie Chort, Vice-President, Corporate Citizenship at RBC. “Our participation in the green bond market helps RBC deliver on our coordinated, enterprise-wide approach to accelerate clean economic growth and transition to a more sustainable future.”
Geographically, demand was dominated by German and Austrian investors who purchased 25% of the securities, followed by French investors who took up another 23%. The remaining went to investors from the Benelux (19%), the Nordics (10%), UK and Ireland (9%), Southern Europe (5%), Switzerland (4%), the Middle East and Asia (3%) and others (2%).
“The green format brought a number of investors to the deal that normally would not be active in the asset class,” commented Lars Mac Key Head of DCM Sustainable Bonds at Danske Bank.
Sectorally, demand was dominated by asset managers who purchased 62% of the notes, leaving the rest to central banks and official institutions (13%), banks (12%), insurance and pension funds (8%), corporates (3%), private banks(1%) and other miscellaneous investors (1%).
“The issuance of Green Bonds will further diversify our funding sources and satisfy the needs of investors that have green mandates,” according to David Power, Vice-President, Corporate Treasury at RBC. “We are proud to finance environmentally responsible businesses and projects that promote the transition to a more efficient and sustainable lower-carbon economy,” said Patti Shugart, Managing Director and Global Head, Corporate Banking and Global Credit at RBC Capital Markets.
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