IFR Magazine - October 27, 2018

„ FRONT STORY CORPORATES

Green Schiphol encourages brown issuers

Investors pile into Schiphol’s Green bond debut

Other airports now eyeing the market

Bankers are hoping the success of ROYAL
SCHIPHOL’s debut Green bond will open up
the category to other brown issuers that are
looking to make their businesses more
ENERGYûEFlCIENT
The Dutch airport’s debut green deal
VIRTUALLYûmEWûOFFûTHEûSHELVESûONû-ONDAYû
pricing with a negative new issue
concession after rapacious investors left the
deal nearly six times covered - despite some
CONTROVERSYûOVERûITSûGREENûSTATUS
“The Schiphol deal is encouraging issuers
from browner sectors to have a look at this
MARKETvûSAIDû!RTHURû+REBBERSûSUSTAINABLEû
lNANCEûCOORDINATORûATû.AT7ESTû-ARKETSû
WHICHûSTRUCTUREDûTHEûDEAL
h4HEYREûSAYINGûIFûANûAIRPORTûCANûDOûITû
WHYûCANTû)v
3CHIPHOLûWASûTHEûlRSTû%UROPEANûAIRPORTû
TOûISSUEûAû'REENûBONDûANDûNOWûITSûPEERSû
COULDûBEûLOOKINGûTOûDOûTHEûSAMEûBANKERSû
SAID
h%ACHûOFûTHEûLARGERû%UROPEANûAIRPORTSûHASû
LOOKEDûATûTHISûTRADEûWITHûAûLOTûOFûINTERESTvû
+REBBERSûSAID
“They all have their own expansion
challenges while trying to maintain broad
public support - and sustainability is an
IMPORTANTûANCHORûOFûTHATv

RUNAWAY SUCCESS
The success of Schiphol’s bond may be the
GREENûLIGHTûSUCHûBORROWERSûNEEDED
Orders for the €500m no-grow 12-year
REACHEDûOVERûõBNûATûONEûSTAGEûBEFOREû
INVESTORSûRETRENCHEDûSLIGHTLYû"OOKSûCLOSEDû
ATûAROUNDûõBN
Demand on the day allowed the Dutch
AIRPORTûTOûCUTûTHEûSPREADûBYûBPûTOûAûlNALû
BPûIMPLYINGûPRICINGûBP
BPûTHROUGHûTHEû
CURVEûACCORDINGûTOûAûLEAD
,EADSûHADûSEENûFAIRûVALUEûINûTHEûBPûAREAû
using Schiphol’s 2% October 2026s and
!D0SûûSûASûCOMPARABLES
Joint bookrunners were BNP ParibasûING
and NatWest Markets
Despite some grumbling over its green
STATUSûTHEûDEALûHADûAûSMOOTHûLANDING
“It’s not a traditional Green bond in my
MINDûNOûMATTERûWHATûTHEYûSAYûABOUTû
REDUCINGûEMISSIONSvûONEûINVESTORûSAID

0ROCEEDSûFROMûTHEûBONDû!!   ûWILLû

lNANCEûGREENûBUILDINGSûANDûCLEANûTRANSPORTû

according to the airport’s new Green bond

FRAMEWORK

)NûITSûPITCHû3CHIPHOLûASKEDûTHEûBUYSIDEûTOû

FOCUSûONûTHEûENERGYûEFlCIENCYûOFûITSû

BUILDINGSûNOTûTHEûPLANESûTHATûTAKEûOFFûFROMû

THEûRUNWAYS

h7HENûYOUûlRSTûANNOUNCEûSOMETHINGûLIKEû

THISûTHEûlRSTûREACTIONûISûAûBITûOFûHESITANCYû

around the idea of a Green bond in the

AIRPORTûSECTORvûONEûLEADûSAID

But there is quite a lot an airport can do in

THEûWAYûOFûBEINGûMOREûENERGYûEFlCIENTûTHEû

LEADûSAID

)NûITSû'REENûBONDûFRAMEWORKû3CHIPHOLû

says it aims to be the “world’s most

SUSTAINABLEûAIRPORTvû)TûISûPLANNINGûTOûBEûZERO

WASTEûBYûûANDûCLIMATE

NEUTRALûBYû

!SûOFûTHISûYEARûTHEûAIRPORTûSOURCESûALLûITSû

ENERGYûFROMû$UTCHûWINDûPOWERûANDûISû

LINKEDûWITHûTHEûLARGESTûELECTRICûBUSûmEETûINû

%UROPE

h9OUûCANûMAKEûTHEûARGUMENTûBOTHûWAYSvû

AûBANKERûAWAYûSAIDûOFûTHEû'REENûSTATUSûh"UTû

if these airports are making targets to be

CARBON

NEUTRALûTHENûTHATSûGOINGûINûTHEû

RIGHTûDIRECTIONûFORûSUREû3URELYûWEûSHOULDûBEû

ENCOURAGINGûTHATv

)NûANYûEVENTûTHEûPROOFûWASûINûTHEûDEALSû

RECEPTIONûHEûSAID

h)TûCAUSEDûAûBITûOFûCONTROVERSYûBUTû

INVESTORSûHAVEûVOTEDûWITHûTHEIRûORDERSv

Green issuance across asset classes is

expected to grow from €142bn-equivalent in

ûTOûõBNûTHISûYEARûACCORDINGûTOûTHEû

#LIMATEû"ONDSû)NITIATIVEû)TûCURRENTLYûSTANDSû

ATûõBN

EQUIVALENT

GREEN DIVERSIFICATION

0ARTûOFûTHEûREASONûFORû3CHIPHOLSûRECEPTIONû

comes down to investor need for

DIVERSIlCATIONûINûTHEû'REENûBONDûMARKETû

+REBBERSûSAID

h!ûNUMBERûOFûINVESTORSûHAVEûBEENûVERYû

vocal that for them to develop a proper

'REENûBONDûSTRATEGYûTHEYûNEEDûAûWELL

DIVERSIlEDûPORTFOLIOvûHEûSAID

The Green bond universe is currently

heavily skewed to utilities and public sector

BORROWERS

3OMEûDIVERSIlCATIONûCOULDûCOMEûFROMû

6ODAFONEûWHICHûINû!UGUSTûESTABLISHEDûAû

'REENûBONDûFRAMEWORKûTHEûlRSTûINûTHEû

%UROPEANûTELECOMSûSECTORûACCORDINGûTOû

+REBBERSû4HEûCOMPANYûHASûYETûTOûISSUEûAû

'REENûBOND

For a bond from a brown company to be

EMBRACEDûBYûGREENûINVESTORSûITûWILLûHAVEûTOû

SHOWûTHATûITûISûlNANCINGûAûBROADERûSHIFTû

TOWARDSûENERGYûEFlCIENCYû+REBBERSûSAID

Investors still remember Repsol’s bond -

THEûlRSTûGREENûDEALûISSUEDûBYûANûOILû

COMPANYûBUTûWHICHûWASûSUBSEQUENTLYû

EXCLUDEDûFROMûALLûMAJORû'REENûBONDûINDICES

ENBW GETS GREEN LIGHT

ENBWSûDEBUTû'REENûBONDûWHICHûALSOûPRICEDû

LASTûWEEKûISûAûGOODûEXAMPLEûOFûTHEû

INSTRUMENTûBEINGûUSEDûTOûlNANCEûAûBROADERû

MOVEûTOWARDSûSUSTAINABILITY

0ROCEEDSûFROMûTHEû'ERMANûUTILITYSûNO

grow €500m trade will be used to help fund

the utility’s transition towards more

RENEWABLEûSOURCESûOFûENERGY

Germany is hoping to be free of nuclear

ENERGYûBYûûANDû%N"7ûSTARTEDûITSûSHIFTû

TOWARDSûRENEWABLESûINû

4HEûDEALûCOULDûBEûITSûlRSTû'REENûBONDûOFû

MANYû%N"7û!!

!

    ûINTENDSûTOûINVESTû

õBNûBYûûUNDERûITSûGREENûlNANCINGû

FRAMEWORKûWITHûAûPARTICULARûFOCUSûONû

expanding renewable energies on an

INDUSTRIALûSCALE

)NVESTORSûLAPPEDûUPûTHEû

YEARûISSUEû

enticed by the chance to snap up a debut

Green bond from an issuer that has been

ABSENTûFROMûTHEûPUBLICûMARKETûSINCEû

"OOKSûWEREûAROUNDûõBNûMEANINGûTHATû

LEADSûCOULDûSETûTHEûSPREADûATûBPûTHEûTIGHTû

ENDûOFûTHEûBP

BPûGUIDANCEûRANGEû4HATû

whittled down the concession to about

BPûACCORDINGûTOû)&2ûCALCULATIONSûUSINGû

OUTSTANDINGûBONDS

!ûLEADûSAIDûTHEû.)0ûLOOKEDûMOREûLIKEûBP

BPûUSINGûADJUSTEDûRECENTûûANDû

YEARû

BONDSûFROMû%NGIEûANDû!D0

SEB and Societe Generale "$   ûWEREûJOINTû

global coordinators and green structuring

ADVISERSûWITHûBBVAûDZ BankûLBBW and

Morgan StanleyûJOINTûBOOKRUNNERS

Eleanor Duncan

BONDS

SSAR 25 Corporates  FIG 32 Covered Bonds 34 High-Yield 36 Structured Finance 37