BNP Paribas is set to launch the first equity-linked green bond in the Asia Pacific before the end of this month. The bond will be issued by the triple A-rated World Bank, with the proceeds destined for the multilateral’s environmental projects. The seven-year bond is linked to the Ethical Europe Equity Index, which tracks the performance of 30 European stocks through a sustainable responsible investing (SRI) filtering, and is aimed at retail, private banking and corporate investors, as well as insurance and pension funds. The funds raised from the bond will be used for supporting both companies with good corporate social responsibility track record and specific climate-friendly projects, of which 34% will take place in Asia, said Michael Bennett, head of derivatives and structured finance at the World Bank Treasury.
The bond will be 100% capital-protected if held to maturity, and the returns will be on the performance of the index, said Benjamin Biette, director of equity derivatives structuring and trading at BNP Paribas. The selected shares are based on environmental, social and governance criteria. “Besides environmental consideration, the bond also provides the opportunity to participate in the uptrend of the index,” said Biette. “Although we saw there has been a recovery of the S&P500 index last year, there will be more traction on Europe’s stockmarket and European shares as a result the announcement of more quantitative easing in Europe at the beginning of the year.”
Green bonds have raised over $7bn globally and have been offered to a wide range of retail investors in Europe, said Bennett. He said that the entry level of the bank’s latest equity-linked green bond will be similar to previous issues, which is around €100 ($113) for retail investors and $100,000 for non-retail investors.
BNP Paribas teamed up with the World Bank and Vigeo, a European company specialising in assessing companies and organisations in their practices and performance on environmental, social and governance (ESG) issues, in July 2014 to launch a ten-year structured World Bank green bond linked to the performance of the Ethical Europe Equity Index in July. The French bank launched a second, similar bond in November.
BNP Paribas raised more than €750m from structured products based on the Ethical Europe Equity Index in 2014 and has marketed 25 structures aimed at retail investors linked to the index in France and Belgium, according to SRP data.
The Green Bond Notes Ethical Europe Equity listed on the Luxembourg Stock Exchange in July had a minimum investment of €100,000.
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