The Fastest Green Bond Yet?

    Stockholm (NordSIP) – Porsche AG announced it had issued a three-tranche € 1 billion green Schuldschein, the largest ever such security according to the car manufacturer. The green Schuldschein was issued in tranches offering maturities of five, seven and ten years as well as fixed and variable interest rates.

    Schuldscheine are bilateral loans, privately placed, unlisted, unregistered and usually governed by German Law. Because of their billateral nature, these transactions tend to be less onerous from a documentation point of view and so simpler, faster and cheaper to conduct that Eurobonds.

    “We have seen that more and more investors want to invest their funds sustainably. With the green Schuldschein, we now give lenders such an opportunity”, says Lutz Meschke, Deputy Chairman and Member of the Executive Board for Finance and IT at Porsche. “We have succeeded in issuing the Schuldschein at extremely favourable terms in the current favourable capital market environment. This shows the high level of trust investors have in the long-term development of our brand and in Porsche as a company,” Meschke added.

    Certification and Second Opinion

    The Climate Bonds Standard Board certified the bond on behalf of the
    Climate Bonds Initiative under the “Clean Transportation” category.

    ISS-Oekom’s second party opinion considered that Porsche’s Green Schuldschein performed positively against the ICMA’s Green Bond Principles. It noted that the “overall sustainability quality of the asset pool in terms of sustainability benefits, risk avoidance and minimisation is positive based upon the ISS-Oekom Green Bond KPIs.”

    The rating agency noted that Porsche had managed previous ESG issues well. However, “a lack of disclosure on overall fleet emissions” and “a significant controversy level” due to Porsche’s involvement in the Diesel emission scandal” led ISS-Oekom to assign Porsche a C rating. ISS-Oekom operates a scale of A to D, where C+ is the threshold for a Prime rating.

    Strong Demand From Asia

    More than 100 institutional investors participated in this transaction. Strong demand from international investors – mainly from Asia – that had not, in the past, participated in Schuldschein issues by Porsche was particularly encouraging. Landesbank Baden-Württemberg, Bayern LB and ING arranged the transaction. ING provided support as a “green advisor” – an expert in green Schuldschein bonds.

    The Porsche Taycan

    Proceeds from this transaction will exclusively be used to finance the Porsche Taycan, the first fully electric vehicle by Porsche, according to the car manufacturer

    Porsche will introduce the Taycan September, which it will launch onto the market at the end of  2019. More than 20,000 potential customers have already signed up to an option programme list and made a down payment for the Taycan.

    According to Porsche, the sustainability of the Taycan extends beyond the fact that it is a combustion and emissions-free sports car. Its development and design are also characterised by sustainable and resource-conserving actions, and by the use of modern plants. The Taycan’s assembly uses an automated guided vehicle systems (AGVs). The use of AGVs reduces the height of the assembly plant and ensures that the building does not negatively affect the circulation of air in the Stuttgart-Zuffenhausen area.

    Because the viability of an electric car depends on access to a comprehensive charging infrastructure, the Porsche Charging System digital platform enables Europe-wide access to around 70,000 charging points from various providers and central billing via Porsche. Both Porsche’s own fast-charging stations, as well as those from Ionity in Europe or Electrify America in the USA, are available.

    Featured Photo Courtesy of Porsche AG

    Filipe Albuquerque
    Filipe Albuquerque
    Filipe is an economist with 8 years of experience in macroeconomic and financial analysis for the Economist Intelligence Unit, the UN World Institute for Development Economic Research, the Stockholm School of Economics and the School of Oriental and African Studies. Filipe holds a MSc in European Political Economy from the LSE and a MSc in Economics from the University of London, where he currently is a PhD candidate.

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