KfW

With asset prices inflated to levels that would have seemed impossible a few years ago, capital market participants are looking forward to the European Central Bank’s (ECB’s) eventual exit from its quantitative easing (QE) programme with a mix of hope and dread, writes Lewis McLellan.

KfW tapped its July 2020 Australian dollar green bond for A$200m ($156.9m) on Wednesday, pricing well inside its existing Kangaroo curve — an illustration of the developing maturity of green markets down under.

The European Union (EU) is set to tap an April 2031 line on Wednesday, coming on the heels of KfW five year benchmark on Tuesday, that raised €3bn.

KfW hit screens on Monday, mandating three banks for a five year euro transaction.

Abu Dhabi Commercial Bank is set to come to market for a potential triple tranche kangaroo bond on Friday, following a deal from Emirates NBD that, according to a banker at one of ADCB’s leads, showed the market was still accessible to Middle Eastern borrowers.

The African Development Bank has sold its longest MTN ever, leading a spurt of long dated private placement euro issuance from public sector borrowers.

The much sought after trend for green bonds to outperform conventional paper in secondary trading is now a reality, according to public sector borrowers — but perhaps only for those with enough dots on their green curves to provide a comparison.

Public sector borrowers this week smashed through their conventional curves with green bond issues. But there was some debate over whether this marks the start of a trend or is merely the product of scorching conditions in both the euro and dollar markets.

Guarantor: Federal Republic of Germany

KfW has punched through its conventional curve with a dollar green bond that left bankers away from the trade a similar colour of envy. More SRI supply is on the way, after the European Bank for Reconstruction and Development hit screens for Thursday’s business.

Investors are packing order books for public sector syndications this week, striving to pick up what may be a dwindling pool of conventional assets. With much of their funding for the year done, borrowers are turning to the green bond market.

KfW has joined the select group of capital markets institutions to have issued a security using blockchain technology. Though only a proof of concept, the transaction highlighted the fact that, without some kind of distributed ledger cash system, blockchain-based issuance has little to offer. If the technology is to realize its promise, central banks must weigh in and provide a solution.