Raising C$500 million through its Climate Awareness Bond (CAB) issuance on Oct. 27, the European Investment Bank (EIB) becomes the first green bonds issuance in Canada by a non-Canadian issuer.
Hydropower accounts for more than 60% of Canadian electricity generation, according to the Canadian Hydropower Association. Because CABs have a mandate that funds are used for renewable energy, it is likely some of the proceeds will effect hydroelectric facility development.
“The country still has vast untapped hydroelectric potential, more than enough to double the current installed capacity. A number of new hydroelectric generating stations, and national and cross¬‐border transmission projects are currently in various stages of development,” the association said.
According to EIB, Canadian investors purchased 53% of the CABs. The remaining issue enjoyed balanced global consumption indicated by 18% Asian investment, U.S. investors bought 17% and European and Middle East investors acquired 12%.
The EIB offered bonds at a 1.25% coupon rate that have a 5-year maturity.
By investor-type, 45% were banks, central banks and official institutions bought 21% of the issue and pension funds and asset managers acquired 34%.
In a press release, EIB said the transaction saw substantial socially responsible investing participation, attracting several new investors for the bank’s Canadian program.
EIB said this year, through green bond issuance in several countries; it has already raised US$3.85 billion.
The global green bonds market has grown significantly this year.
According to Climate Bonds Initiative’s report released in July, “Bonds and Climate Change: the state of the market in 2015,” the total climate-aligned bonds universe stands at US$597.7 billion – a 20% increase from 2014. The total includes unlabeled climate-aligned bonds at $531.8 billion and labeled green bonds at $65.9 billion.
As of January, according to EIB, the bank has been the largest green bonds issuer with $8.37 billion raised across 10 currencies.