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BBVA issues eurozone's largest ever senior green bond

Wednesday, June 20, 2018

The 7-year non-preferred senior green bond makes BBVA the first Spanish bank to issue such debt instrument. High demand - three times higher than the bond’s value - allowed it to lower the price to mid-swap plus 80 basis points.

“We are committed to sustainable finance, and this issue is yet another example,” said Carlos Torres, CEO BBVA. 

BBVA’s inaugural €1 billion green bond issue sparked tremendous interest among investors. In just three hours, the order book rose to over €3 billion. Excess demand allowed to lower the price from mid-swap plus 95 basis points to mid-swap plus 80 basis points. The chosen instrument, non-preferred senior, also surprised investors, more used to other types of green bonds, such as mortgage-backed securities or preferred senior bonds.

WHAT IS A GREEN BOND?

A green bond aims to grow the role of the bond markets, making it a key player in the financing of projects that contribute to environmental sustainability. Funds raised through green bond issues are exclusively allocated to financing or refinancing eligible green projects, in part or in whole, and whether new or existing.

BBVA’s first green bond arrives just days after the bank published its framework for the issue of sustainable bonds, which is linked to the SDGs. This framework meets the demands of those investors who are interested in fighting climate change.

With these types of issues, the bank channels funding to the financing of projects in sectors such as renewable energy, energy efficiency, waste management, water treatment, and access to essential needs and services like housing and inclusive financing.

 

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