The EIB’s €1.35bn 0% March 2026 ECoop
and the €1.8bn 1.25% November 2026 CAB
were trading at less 16.5bp and less 23.9bp,
respectively, when the new paper was
priced, according to Tradeweb.
The November 2026 bond issue, however,
is longer than the debut eight-year SAB.
“It is a bit off, but I guess they were trying
to avoid a typical benchmark,” said a second
banker.
For the issuer, the maturity was about
finding the right point on the curve.
“I think we have a fairly liquid CAB there
that provided a good pricing point [the 2026]
and we wanted it to be somewhere between
five and 10 years because that was the
feedback we got in demand. This is not a
€500m benchmark anyway, so people are
flexible to if it is a seven-year or a long
seven-year,” said EIB’s head of capital
markets, Eila Kreivi.SECONDARY BITES
Even coming at fair value, the expectation
was that the new bonds will trade on average
2bp tighter in the secondary market.
“EIB’s benchmark euro issuances trade
wider than any Green/SRI, while the smaller
euro issuances of around €250m-€500m
trade tighter than the Green/SRI, which fits
right in the middle,” said the second banker.
From an investor’s perspective, he added,
there is a “self-fulfilling prophecy” that
drives demand.
“This type of issuance is more debated in
public, so over the last year you could see
tight pricing for Green/SRI issuance as it
gives you more room to perform in the
secondary market.”
As demand increases, the SSA sustainable
pipeline is likely to gather momentum, with
bonds expected from Agence Francaise de
Developpement, Development Bank of
Japan and Region Occitanie.
Societe du Grand Paris is another
candidate. The agency hired Barclays, BNP
Paribas, Credit Agricole, HSBC, Natixis and
Societe Generale in July to set up a €5bn
Green EMTN programme.
Bank of America Merrill Lynch, Commerzbank,
Credit Agricole, SEB and UniCredit arranged the
EIB transaction.SPAIN DECOUPLING FROM ITALY SPURS
SYNDICATION HOPESBanks are hopeful that SPAIN might return to
the market with a syndicated inflation-
linked bond as early as this week, leaving
behind Italy-induced fears of volatility.
Unlike Italy, which has only sold one
bond via syndication this year, Spain has
remained broadly immune from the
volatility and raised a combined €23bn from
three syndicated benchmarks.“There was talk of them looking into a 15-
year (linker) earlier this year, and if the
market and the environment are stable
enough, there’s no reason why they can’t
look at a trade like that,” said a syndicate
banker.
Bankers said the sovereign could come
ahead of the Italian budget proposals, which
are due at the end of the month.
“It makes sense for Spain to come to
market sooner rather than later,” another
banker said. “They could take a flexible
approach.”
Spain has already proven that ructions in
Italy have done little to hamper demand for
its bonds. It sold a €7bn syndicated 10-year
at the end of June on books of more than
€24bn.
The June paper printed 2bp inside
guidance at swaps plus 55bp, resulting in a
low single-digit new issue premium.
“If they return now, I don’t think it would
be expensive as they wouldn’t have to
necessarily pay up,” said the first banker.
Spain’s €7bn 1.4% July 2028 was bid at
swaps plus 57bp on Friday and its €10bn
1.4% April 2028s at plus 54bp, according to
Tradeweb data.
The latter has recovered from wides of
over 80bp, tightening the spread versus
Germany to near 100bp from some 140bp
during the height of Italian volatility in late
May.
“Spain is now relatively well contained
from Italy in terms of the valuation
metrics,” said the first banker.
“Equally I think that if you look at the
inflation side, they are much more well-
paired with France, then they are with Italy
at the moment, in terms of where the
secondary is trading.”IRELAND HIRES BANKS FOR DEBUT
GREEN BONDIRELAND has hired HSBC France and JP Morgan
to advise on a debut Green bond, which
would be only the third eurozone sovereign
issuance in the format.
Paschal Donohoe, Ireland’s minister for
finance and public expenditure and reform,
said last Friday in Dublin that issuance
under the Irish Sovereign Green Bond
framework would help the country meet its
long-term goals.
“The government’s decision to approve
the ISGB Framework clears the way for the
NTMA to open up a new funding channel for
climate change action, which is a top
priority for government, and specifically to
target objectives set out in the National
Development Plan and Project Ireland 2040,
which articulate Ireland’s ambitions in
regard to building a sustainable, low-carbon
society,” Donohoe said.The proceeds will be allocated to eligible
green projects, which primarily address
climate change mitigation and adaptation,
clean water and wastewater treatment,
counter natural resource depletion and loss
of biodiversity, and reduce air pollution.
Supranationals, agencies and corporates
have been at the forefront of the Green
issuance movement in recent years, but
sovereigns have been few and far between.
Poland was the first, printing a twice-
subscribed €750m five-year in December
2016 at 48bp over swaps.
France and Belgium followed, the former
with a €7bn June 2039 in early 2017 that set
a new maturity and size milestone, and the
latter with a €4.5bn 15-year last February.SWISS FRANCS
GREEN BASELKANTON BASEL-STADT, rated AA+ positive by
S&P, opened the Swiss week with a debut
Green bond, the first of its kind from a
German-speaking Swiss canton. French-
speaking Canton Geneve was the first to
come, in November 2017, with its dual-
tranche seven and 10-year deal.
Books opened for a SFr230.885m seven-year
at a set spread of mid-swaps less 14bp, with the
pricing level equating to a yield of -0.0525% for
a spread of 28bp over government paper.
That was around flat to the bid side of the
issuer’s well-stocked and very flat curve. Its
0% November 2024s and 0% September 2026
conventional non-Green bonds were both
quoted at around swaps less 14bp bid.
Basler Kantonalbank was sole lead manager
for the deal, which will go towards the
financing of construction or conversion of
five buildings in the area, including a new
building for the University of Applied
Sciences FHNW and the new building of the
Office for Environment and Energy.
“Kanton Basel-Stadt is committed to a
climate-neutral administration and fulfils its
role model role in sustainable construction.
These projects are characterised by high
energy efficiency, ecological construction
and a mixed user structure. They take into
account the ecological, economic and social
aspects of sustainability,” said Basler
Kantonalbank in a statement.
The Green bond has a second party
opinion from ISS-oekom.NON-CORE CURRENCIES
AOFM TO EXTEND LINKER CURVEThe AUSTRALIAN OFFICE OF FINANCIAL MANAGEMENT
has mandated Bank of America Merrill Lynch,International Financing Review September 8 2018 29BONDS SSAR
6 Bonds 2250 p25-55.indd 29 07/09/2018 19:29:58