The EBRD invests in landmark green financing instrument
The European Bank for Reconstruction and Development (EBRD) has made its first investment in a green bond. The €300 million bond, in which the EBRD has invested approximately €30 million, is the first bond issued by Lietuvos Energija, the Lithuanian energy utility. It is the company's first issue under a €1 billion programme that will finance ambitious investment plans in projects that promote the transition to a sustainable, modern electricity network.
Green bonds are debt instruments which raise capital for environmentally sustainable projects and are regulated by voluntary guidelines. The Lietuvos Energija green bond was issued in compliance with the Green Bond Principles (GBP) established in 2014 by a consortium of investment banks, who subsequently appointed the International Capital Markets Association (ICMA) as the secretariat. The bond has received a "dark green" second opinion from CICERO, the Centre for International Climate and Environmental Research, confirming that it corresponds to a long-term vision of a low-carbon and climate-resilient future.
The EBRD has played a key role in promoting the green bond market: it has been an active issuer of green bonds since 2010 and a member of the Green Bond Principles Executive Committee since 2015. Lietuvos Energija's issue is one of the very first green bonds to be issued in the EBRD's region, and the first that the EBRD will invest in. Previously the EBRD has invested in bonds which raised funds for sustainable projects that were aligned with guidance issued under the GBP for such projects.
Lietuvos Energija took advantage of the strong interest from investors to increase the initial targeted size by €100 million and managed to secure the longest maturity ever achieved in the Baltic states from the corporate green bond capital market. The issue has attracted a large order book with orders coming from over 120 investors from 25 countries.
Harry Boyd-Carpenter, EBRD Head of Power and Energy Utilities, said: “We are very pleased to have supported Lietuvos Energija as an anchor investor on this landmark transaction. The success of the issue, which was very well received by the market, proves that companies from central and eastern Europe can successfully access the green bond market and diversify their funding base by attracting a wider range of investors to finance the transition to a green economy. This is really a tribute to Lietuvos Energija's success in presenting to the market such a well-structured and compelling proposition. We hope that this will be a model for many other utilities in our region”.
Dalius Misiunas, Chief Executive Officer LE UAB said: “This is the first time in the Lithuanian market that a state-controlled company is diversifying its funding base by issuing bonds. It is also the first issue in Lithuania of “green bonds” under which the proceeds are exclusively invested in green energy projects. We are very proud to set such a high standard in the Lithuanian debt financing market”.
Energy security and energy efficiency are one of the EBRD’s top priorities in Lithuania. To date, the Bank has invested more than €703 million in all sectors of the Lithuanian economy, supporting over 80 projects.