Stockholm (NordSIP) – On June 30th, Landwirtschaftliche Rentenbank, Germany’s development agency for agribusiness and rural areas, issued a €1 billion zero coupon 10-year green bond.
Rentenbank provides low-interest loans for a variety of agriculture-related investments including renewable energies. Net proceeds from this transaction will be used to fund a portfolio of loans financing production, storage and distribution of onshore wind and solar energy. Sustainability is a guiding principle within Rentenbank’s promotional mandate. Its Green Bond framework was assigned with a ‘Dark Green’ rating from Cicero and is fully aligned to the ICMA Green Bond Principles.
The bond was priced at 8 basis points (bps) below mid-swaps, down from guidance of MS-5bps. The final yield was 0.019% equivalent to a 24.5bps spread over German government bunds, the Euro-zone benchmark. The deal was priced marginally through fair value and with an estimated Greenium of 1bp, as well as through several peers. Extensive demand swelled final books to €2.3 billion. Strong participation of ESG investors who accounted for 73% of the final allocation and Dark Green investors accounting for 53%
Investors from Germany were the dominant group, single-handedly accounting for 33% of the final allocation. In Scandinavia, Denmark was the dominant nation representing 11% of the final investors. Italian investors (11%) were the next largest investors group, followed by other miscellaneous European investors (38%) and Asian investors(7%). Sectorally, high-quality demand from asset managers (42%) and banks (44%) was dominant. Insurance and pension funds collectively purchased another 9% of the bonds, leaving the remaining 5% to central banks and official institutions.
“Rentenbank is an appreciated Green Bond issuer, having issued Green Private Placements for many years. Last year’s introduction of a Green Bond framework related to financing onshore wind and solar energy, achieved a Dark Green shading from CICERO Shades of Green and facilitated benchmark size issuance. Following last year’s inaugural 7 year EUR benchmark Green Bond, Rentenbank now builds its curve with this 10 year point” says Lars Mac Key, Head of Sustainable Bonds Danske Bank
“Danske Bank is delighted to have arranged Rentenbank public Green Bonds in both EUR and SEK. Rentenbank has a strong following with Nordic investors, as demonstrated by the solid Danish participation in this second EUR benchmark who appreciate Rentenbank’s strong green bond platform and credit,” says Luke Oram, SSA Origination Danske Bank.
Image courtesy of Rentenbank