Poland issues bonds to bolster green credentials

Poland has returned to the “green bond” market for a third time, cementing its status as the most frequent sovereign issuer of debt linked to climate and environmental projects.

The central European nation raised €1.5bn of 10-year debt and €500m of 30-year debt on Thursday, with order books for the offer reaching €4.8bn.

The 30-year bond, which had a 2 per cent coupon, is the longest green bond sold by a sovereign since the market for environmentally-labelled debt first emerged a decade ago.

Three years ago Poland became the first government to sell green-labelled debt in a deal that raised €750m of five-year debt. It then returned to the market last year with an 8.5-year issue that raised €1bn.

The country’s entry into the market was followed by France in January 2017. France subsequently tapped its original bond for additional cash several times and now has nearly €15bn of green-labelled debt outstanding.

Other countries — including Belgium, Lithuania, Fiji, Ireland and Nigeria — have followed suit by selling similar bonds.

By issuing several green bonds, Poland is aiming to become the first nation to build what is known as a yield curve for the debt, offering investors a wide range of maturities to choose from.

However, the country has drawn criticism from some environmental groups, which last year accused Warsaw of “inconsistency” for pitching to green-minded investors while continuing to rely on coal as the foundation of its energy policy. Indonesia, another big coal producer, also attracted controversy when it sold a green bond last year.

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Cecile Camilli, a senior debt capital markets banker at Société Générale, who acted for Poland in the deal, said the deal demonstrated the finance ministry’s “commitment” to the green bond market.

“When they first issued in 2016 they committed to come to the market on a yearly basis and to be a regular issuer,” she said. “The growth in issuance size and maturity [since then] is very strong testimony to that.”

The global market for green bonds grew 6 per cent year-on-year in 2018 to hit $167bn, according to credit rating agency Moody’s.

The rate of growth was somewhat slower than in previous years, as turbulence hit the wider capital markets, but Moody’s expects green bond sales to pick up again to reach $200bn this year.

Teresa Czerwińska, Poland’s finance minister, said the green bond had “met with huge investor interest”, according to a statement seen by Reuters.

Poland has raised more than 50 per cent of its total annual financing needs for 2019, according to its finance ministry. The country is set to run a budget deficit of 1.7 per cent of gross domestic product this year, according to Fitch, another rating agency.

Citi, JPMorgan, Société Générale, ING, Santander and PKO BP acted as bookrunners on Thursday’s deal.



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