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Tuesday, 21 November 2017

SRI Bond House: Credit Agricole

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Top of the tree

Sustainability and social bonds developed from fresh innovations to fully fledged partners of more traditional Green products in 2016, driving SRI’s expansion into new frontiers. For its commitment to developing a robust framework for the sector while pioneering innovation across a growing global marketplace, Credit Agricole is IFR’s SRI Bond House of the Year.

Several banks have played important roles in promoting SRI, but Credit Agricole stands out in protecting the standards and integrity of the industry while propelling the market’s evolution.

Impact-bond issuance grew alongside Green bonds to the extent that, in June, Credit Agricole acted as one of the co-creators of the social bond principles, which were fully enshrined in ICMA guidance.

The bank has embraced its role at the vanguard of innovation despite a significant cost in both time and resources.

“Working on the social bond guidance principles was not direct business but to protect the market and best practices,” said Tanguy Claquin, head of sustainable banking at Credit Agricole. “It took a great amount of discussion and negotiation, but the commitment of top management never stopped.”

Credit Agricole’s record of engagement stretches back to being a founding member of the Equator Principles. But it was also the only founding/drafting bank re-elected to the Green bond principle executive committee in 2016. And in March, Credit Agricole was accredited by the Green Climate Fund alongside HSBC.

The bank’s unwavering focus on the sector has enabled it to establish dedicated sustainable banking and research teams. That continued commitment has paid off in repeat mandates with supranational and agencies, issuers that for the moment remain the driving force behind volumes.

“We really work with issuers not only in structuring the inaugural transaction but also reporting and advising on impact measurement,” said Pierre Blandin head of debt capital markets for sovereigns, supranationals and agencies. “As a result of that, we are able to get repeat business.”

Highlights included acting as a joint lead for BNG’s €1bn SRI bond, which was not just the first benchmark social bond from the Netherlands but also the first social bond issued in line with 2016’s revised Green bond principles.

The bond flew out of the door despite volatile markets, with investors seizing the opportunity to diversify away from a pure Green play and add a social bond to their basket. Proceeds from the notes will go towards financing housing associations in the Netherlands, with a concentration on deprived areas.

Credit Agricole also acted as structurer for the first Finnish Green bond from MuniFin, and won business for the fourth time from Ile de France when it structured €650m of 2025 notes, the region’s largest ever issue.

But the year has not just been a story of ever-growing volumes from supranationals and agencies. Credit Agricole was also involved in major transactions from the nascent corporate and banking sectors. EDF issued the largest euro Green tranche and the biggest international Green tranche when it printed a €1.75bn deal, and Credit Agricole acted as active bookrunner for Iberdrola’s US$700m bond, which saw the Spanish company secure its lowest-ever coupon.

In banking, Credit Agricole helped Berlin Hyp to become the first lender to tap the market with two different financial structures as part of a comprehensive Green bond programme, with the bank issuing a €500m senior unsecured bond to follow its 2015 Pfandbrief.

“Green bonds have transformed issuers and investment banks as well,” said Claquin. “Berlin Hyp is one of the iconic examples of that.”

Credit Agricole arranged over 45 SRI bonds in 2016, leveraging its strength not just to win business in its home European marketplace but also to plant the SRI flag in new geographies. 

The growth in Chinese SRI issuance was a hot topic for the year, and Credit Agricole was heavily involved in the landmark offering from the Bank of China. Credit Agricole acted as a joint global co-ordinator as the Chinese bank sold the country’s first international Green bond. The US$3.03bn-equivalent three-currency sale made history as the world’s biggest Green bond issue.

Credit Agricole also stamped the SRI mark on other fledgling territories, bringing to market the first South Korean Green bond, from Hyundai Capital Services, and Axis Bank’s US$500m trade. Axis Bank’s bond was the inaugural international Green transaction from an Indian issuer.

To see the digital version of this review, please click here.

To purchase printed copies or a PDF of this review, please email gloria.balbastro@tr.com

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