Allied Irish Bank Launches Green Bonds Worth €1 Billion

The proceeds will be utilized to finance renewable energy projects

September 25, 2020


The Allied Irish Bank (AIB) announced that it has issued green bonds worth €1 billion (~$ 1.16 billion) to finance projects with climate change benefits.

Green bonds are financial instruments designed to raise money for climate and sustainability-related projects and activities. AIB said that the proceeds worth €1 billion would enhance its regulatory capital position. It would be utilized to finance or re-finance eligible projects such as renewable energy projects, construction of low carbon offices, and energy-efficient homes.

The bank stated that the green bond is its biggest unsecured transaction since the financial crisis. The bonds were priced at +330 points over the mid-swap, a minimal new issue premium. The book saw strong momentum, with the book peaking over €2.5 billion ($2.91 billion), the bank said. It further added that there was impressive uptake from key accounts across Europe and the United Kingdom, with 150 individual investors, including green investors.

According to its press statement, AIB has become the first Irish bank to complete a green bond issuance. It is also the second European bank to raise supplementary capital by issuing a green bond.

The bank said the issuance of a green bond is in line with its capital and sustainability plan. The bank amended its framework recently to line up to the European Union (EU) green bond classification standards.

“AIB’s first green bond offers socially responsible investors an opportunity to support AIB as it continues to transition its business towards greater environmental sustainability and support its customers on the journey to a low-carbon future,” said Colin Hunt, Chief Executive Officer of Allied Irish Bank.

According to AIB, it raised €625 million ($727.98 million) in additional Tier 1 capital earlier this year. It also set a target to reduce its carbon emissions by 50% by 2030.

AIB has been working towards Ireland’s transition to becoming a low-carbon economy. Over the last year, it established a Climate Action Fund, a new Green Mortgage Product, and a Socially Responsible Investment Bond Framework. It is also committed to reducing the bank’s carbon emissions by 50% by 2030.

In August 2020, Brookfield Renewable, a Canada-based renewable energy investor, announced that it would issue green bonds to the tune of CDN$ 425 million (~$321 million). These medium-term notes would bear an interest of 3.3% per year, due on August 13, 2050. The issue was expected to close around August 13, 2020.

Mercom earlier reported that Visa, a U.S.-based multinational digital financial service provider, also announced that it had issued its inaugural green bond offering, totaling $500 million (~₹37.38 billion). The issued green bond offering had a semi-annual coupon rate of 0.75% with a maturity period of seven years.

Harsh Shukla is a staff reporter at Mercom India. Previously with Indian Express, he has covered general interest stories. He holds a Masters Degree in Journalism from Symbiosis Institute of Media and Communication, Pune.

More articles from Harsh Shukla.