First green bond issued via Singaporean bank raises US$500 million
(19 July 2017 – Singapore) DBS Group has launched Singapore’s first green bond by a financial institution.
The US$500 million (A$629 million) green bonds will be issued with a five-year maturity, to yield a quarterly coupon of three-month US dollar Libor (London Interbank Offered Rate) plus 62 basis points.
DBS said the issue of the bonds was well-received in the market, allowing the “tight pricing” for a five-year benchmark deal, due to the issuer’s strong credit rating and rare issuance in the US dollar bond market.
“The launch of our green bond amplifies our commitment to sustainability and to supporting projects which have a positive impact. It adds another dimension to efforts to ‘green’ our operations, and lends support to the transition to a low-carbon economy,” said DBS chief financial officer Chng Sok Hui.
The bonds were placed with investors in Asia (37 percent), the United States (41 percent) and Europe (22 percent), with institutional investors, fund managers, asset managers and banks showing strong appetite, said the bank.
The net proceeds from the issue of the bonds will be used for the finance and treasury activities of DBS group, including the provision of intercompany loans or other forms of financing to DBS Bank and its subsidiaries.
The first green assets are expected to include the banking group’s financing of Marina Bay Financial Centre Tower 3, which was certified Green Mark Platinum — a building rating system to assess environmental impact — by the Building and Construction Authority of Singapore.
The issuance comes after a March announcement of the Green Bond Grant scheme by the Monetary Authority of Singapore designed to kick-start the development of a green bond market in the city-state.
Under the scheme, qualifying issuances can offset 100 per cent of expenses attributable to obtaining an external review for green bonds, up to a cap of S$100,000 per issuance.
The bonds can be denominated in any currency but have to be issued and listed in Singapore, with a minimum size of S$200 million and tenure of at least three years.
Green and sustainable financing has become a growing area of interest and investment for both businesses and investors, as found by a recent research paper from East & Partners. According to the research, around 60 percent large enterprises around the world require their suppliers to follow specific ESG conditions.