Leading the Sustainability-Linked Bonds market with world’s first issuances from a financial institution & a commercial bank
World’s first Sustainability-Linked Bond from a financial institution by Berlin Hyp AG
Crédit Agricole CIB acted as the Sole Structuring Advisor and Joint Bookrunner in this ground-breaking 10-year EUR 550 million senior unsecure preferred bond issued by Berlin Hyp AG, the world’s first Sustainability-Linked Bond from a financial institution.
Berlin Hyp established a Sustainability Performance Target (SPT) to reduce the carbon intensity of the entire loan portfolio by 40% between 2020 and 2030. If the SPT is not met at the observation date (31 December 2030), coupon of the bonds will be increased by 25bp, payable from the first coupon payment date following the SPT observation date until maturity or at the point of maturity.
In terms of post-issuance reporting, Berlin Hyp commits to publish its performance on its Key Performance Indicator (KPI) through an annual Sustainability-Linked Bond Report.
World’s first Sustainability-Linked Bonds from a Global Systemically Important Bank by China Construction Bank
Within the same week, Crédit Agricole CIB also acted as Joint Bookrunner in the first SLBs ever from a Global Systemically Important Bank (G-SIB) and also the first USD-denominated SLBs from a commercial bank globally.
China Construction Bank (CCB) successfully priced its USD equiv. 2.4 billion bonds, including USD 1.15 billion SLBs, EUR 800 million Green Bonds and CNH 2bn Transition Bonds via its Hong Kong Branch, Luxembourg Branch and Singapore Branch respectively.
The Green tranche marks the first international Green Bonds focusing on “Water Area Protection and Ecological Environment Treatment” from a Chinese issuer and Crédit Agricole CIB also acted as the Billing and Delivery bank for this EUR tranche.
CCB stands at the forefront in sustainable finance and implements a robust long-term strategy to contribute to China’s carbon neutrality ambition. CCB has selected the “Balance of green loans to adjusted gross loans and advances to customers” as KPIs for the SLBs offering, and set a SPT with a KPI of 9.5% by the end of 2022 for the 3-year tranche and 10% by the end of 2023 for the 5-year tranche.
About Sustainability-Linked Bonds
Unlike Green, Social and Sustainability Bonds whose proceeds are used to finance specific green, social or sustainable investment projects, Sustainability-Linked Bonds are linked to the issuer’s overall sustainability strategy and progress. Typically, this translates into a structure where the coupon of the bond can vary depending on whether or not the issuer reaches some pre-defined sustainability performance targets.
Shortly after Enel’s world’s first Sustainability-Linked Bond issuance, the Green Bond Principles Executive Committee established a working group, jointly coordinated by Crédit Agricole CIB's Sustainable Banking team, to propose market guidance aligned with this innovative approach and, released the Sustainability-Linked Bonds Principles in June 2020.