The EBRD’s investment in green bonds passes €1 billion

By Vanora Bennett

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With its latest investment of €65 million in a green covered bond from PKO Bank Hipoteczny (PKO BH), the EBRD has passed a major milestone in green finance, having put more than €1 billion directly into pioneering green bonds since 2017. The value of these bonds is over €7 billion in total.

Proceeds from PKO BH’s green covered bonds will be used to finance low-carbon residential buildings.

The EBRD promotes green capital markets in the economies where it operates in a number of ways: investing in green bonds across various sectors; knowledge sharing; providing technical assistance to help individual issuers; or offering credit enhancement to attract international institutional investors to new countries and sectors, paving the way for further green bond issuances.

Many of the EBRD’s investments have been in green bonds that were the first from a particular issuer, country or sector. This latest investment is in the first euro-denominated green covered bond from Poland and the first out of the EBRD’s EU region. It follows a PLN 50 million EBRD investment in a PLN 250 million green covered bond issued by PKO BH in 2019 that was the first such bond from a major Polish financial institution. This latest green covered bond saw PKO BH return to the market, this time issuing in international markets in a challenging post-pandemic environment, and with a larger €500 million offering, further diversifying its investor base. It opens the door for other Polish issuers of green covered bonds to follow suit.

The green bond market has accelerated in recent years in the economies where the EBRD operates. The Bank invested a record €524 million in 17 green bonds in 2021 – more than half of its total investment in green bonds to date.

Since 2010 the EBRD has also issued green bonds in response to demand from a growing investor community focusing on environmental issues. By the end of the first quarter of 2022 the EBRD had issued 124 green bonds in 14 currencies for a total of €8 billion.

“Increasing access to green finance in the countries where we work requires the EBRD to help more of our clients come to market and more local and international investors to invest in their green bonds,” explained Harry Boyd-Carpenter, the EBRD’s Managing Director for Climate Strategy and Delivery.

“Doing so can help educate issuers and investors on what makes for a green investment and ultimately to green the whole financial system.”

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