Citi issues its first green bond
US bank taps European market for €1 billion deal.
Citi issued its first green bond on Tuesday – a €1 billion three-year fixed-rate note.
The bond was larger than anticipated, and oversubscribed, pricing at mid-swaps +58 basis points – in from the initial +75bp area.
The bond will fund renewable energy, sustainable transportation, water quality and conservation, energy efficiency and green building projects financed as part of Citi’s $100 billion environmental finance goal.
Philip Brown, managing director, green and social bond origination, at Citi, said the EUR funding priced competitively compared with other markets, adding that investor interest in green bonds is typically strongest in Europe.
“The centre of gravity for investor interest in green bond structures is tilted towards Europe, reflected by the dominance of euro-denominated issuance of green bonds so far,” he says.
Within that investor base, it is mainstream institutional investors that are leading the way, adds Brown.
The bank now joins its US peers Bank of America Merrill Lynch and Morgan Stanley, as well as HSBC, Société Générale, ING, ABN Amro, National Australia Bank and Danske Bank in the green bond market.
Chinese banks have dominated green bond issuance during the past six years, according to data from Dealogic:
Industrial Bank has issued $17 billion in green bonds since the beginning of 2013, with a market share of 11.7%.