Transport for London (TfL), a public-private partnership responsible for London’s massive transport network, has issued a £400m ($596m) green bond. The bond has 10-year tenor and a coupon of 2.125%. The bond was rated AAA by S&P. Underwriters were Bank of America Merrill Lynch and Deutsche Bank. This is TfL’s inaugural green bond and the third sterling denominated green bond ever issued, following Unilever’s £250m and EIB’s £500m green bonds issued in March last year.
According to the FT, the deal couldn’t be done at the size and price “without a significant green investor base”. Deutsche Bank Treasury was a vocal supporter and investor in the bond as part of its green bond portfolio (they’ve made a EUR1bn green bond investor commitment).
The eligible green projects in TfL’s green bond framework are split into low carbon transport categories for overground rail, the underground, station infrastructure, low emission hybrid buses and cycling improvements. This falls in line with the Climate Bonds standard for low carbon transport that advocates rail and bus rapid transit as climate investments because they provide massive savings in GHG emissions compared to using cars. DNV-GL provided a second opinion to assess the alignment of the bond with the Green Bond Principles. TfL also stated the key performance indicators that it would be reporting on during the lifetime of the green bond. Although not project level reporting it’s great to see this disclosure at issuance. We can’t wait to see the outcomes reported in 2016 (and those new cycle lines and tube upgrades making it easier for us Londoners on our daily commute!).
The article was part of a blog post on Climate Bonds Initiative’s Weekly Blog written by Sean Kidney.
For more information regarding the green bond, please refer to TfL’s Green Bond Framework and the DNV GL Business Assurance Services Limited’s Second Party Opinion document.
For additional information, please visit the TfL website in here.