GlobalCapital (GC): In April, the EIB became the first supranational issuer to issue a European Green Bond — a bond aligned with the European Green Bond Standard. How was the deal received?
Rousseau: The market reception was excellent. We had around €40bn of demand across more than 300 orders. The €3bn 12-year deal was oversubscribed by more than 13 times with strong allocations, which made it possible to tighten by three basis points inside initial guidance. Interestingly, it all happened on April 2nd a few hours before the US tariff announcement. It shows that investors were eager to buy high-quality green assets even ahead of a major expected market event.
GC: What is the added value of the EuGBS in a market that has grown steadily without it and how does it compare with the Green Bond Principles of the International Capital Markets Association?
Rousseau: The Green Bond Principles have provided a reference framework for the development of the market since their first edition in 2015. They include high-level voluntary recommendations around core aspects of green bonds, such as the use and management of proceeds, reporting aspects and external review. The EuGBS builds on the Green Bond Principles and goes a step further by linking the use of proceeds to criteria based on the EU Taxonomy. Remaining a voluntary standard the EuGBS does require a mandatory external review conducted by an ESMA-accredited reviewer. It also defines how borrowers must produce key documents like the pre-issuance fact sheet and provide mandatory allocation reporting. This standardisation will help increase the comparability, reliability and integrity of green bonds.
GC: Will the EIB issue only EuGBS-aligned Climate Awareness Bonds (CAB) in the future?
Rousseau: Under our Climate Awareness Bond Framework, we will continue to issue green bonds that are aligned with the Green Bond Principles as well as green bonds that are aligned with both the Green Bond Principles and the EuGBS. Essentially, when we have assets where we can demonstrate full alignment with the EU Taxonomy, we will use these to allocate EuGBS-aligned Climate Awareness Bonds. For other eligible assets that are only partially aligned with the EU Taxonomy we will continue to issue non-EuGBS-aligned Climate Awareness Bonds. All Taxonomy-eligible allocations from our Climate Awareness Bonds are already aligned with the significant contribution criteria of the EU Taxonomy. So far this year, we have issued a €3bn EuGBS-aligned bond — which makes up around 15% of our overall CAB issuance so far this year. What you can expect is a gradual increase in the share of CABs aligned with the standard, which will also depend on the evolution of the usability of the EU taxonomy.
GC: Is the EuGBS gaining traction in the green bond market and what does this mean for the EIB?
Rousseau: When we entered the market at the very beginning of Q2, there had been three issuances under the EuGBS. Since then, we’ve seen twice as many deals. There have been ten issuers in total and the market is approaching €10bn. You’ve seen agencies, banks, local authorities and corporates entering the market. Those corporates happen to also be our clients. So if our clients are aligning with the EU taxonomy and are able to demonstrate that across their activities, it means that we’ll have more and more assets that we can allocate with proceeds from EuGBS-aligned CABs in the future. Things are moving much faster now than they were when we launched the green bond market almost 20 years ago. It’s a matter of confidence — and that’s where institutions like ours have a role to play. We’re helping de-risk this new arena and aiming to provide best practice, so that more issuers can apply the standard and benefit from the strong market demand.
GC: Beyond CABs and the EuGBS, what are the latest developments with the EIB’s Sustainability Awareness Bonds?
Rousseau: This year we have added to the Sustainability Awareness Bonds projects contributing substantially to gender-equality and women’s economic empowerment. We have been able to do this because we’ve now developed a strong track record with such projects, as well as the capacity to demonstrate their impact. To do that, we base our assessment on criteria from several sources: the 2X criteria, the gender equality policy marker from the OECD development assistance committee, as well as the EU Directive to improve gender balance from 2022. Now, when you buy an EIB Sustainability Awareness Bond, you may also contribute to the EIB’s action toward gender equality and women’s economic empowerment.
This approach is what makes our use-of-proceeds bonds, whether Sustainability Awareness Bonds or Climate Awareness Bonds, so special. Since we demand reasonable assurance, the highest assurance, from our auditor, we are particularly careful in selecting eligible projects to be allocated by our use-of-proceeds bonds. Investors know that if a project is in there, then there is an externally reviewed process through which the money flows from the investor, through us, to the final beneficiary and all the way to impact.