Deutsche Bank has arranged inaugural green bonds for three sovereigns in the past few weeks, which the bank says demonstrates the strength of its sovereign, supranational and agency (SSA) debt and environmental, social and governance (ESG) Advisory platforms.

Most recently, the bank priced the largest-ever green bond to date, a £10bn inaugural green gilt for the United Kingdom’s Debt Management Office (DMO). Anchored by its core domestic investor base, the transaction garnered a high quality orderbook in excess of £100bn, the largest green bond issuance on record.

Earlier in September, Deutsche Bank arranged a €5bn inaugural green bond for the Kingdom of Spain. The issue was met with strong enthusiasm from investors, with demand reaching over €60bn within hours of books opening. It benefited from solid support from green investors, who received more than two-thirds of the allocation.

The Republic of Serbia has also successfully placed a green seven-year €1bn benchmark, with Deutsche Bank acting as joint bookrunner. The green tranche was placed alongside a 15-year conventional €750m offering, making it the Republic’s first-ever dual-tranche transaction. Deutsche Bank has led all 12 of Serbia’s bond issuances and took the additional role of green structuring agent on this transaction.

"The investment in to our ESG Advisory team is clearly bearing fruits with a significant uptick in mandates and a growing pipeline of deals, not only from SSAs, but across the spectrum of clients, including corporates and financials as well," said Henrik Johnsson, co-head of Investment Banking EMEA at Deutsche Bank.

"The bank’s coordinated approach has resulted in our market share for SSA debt issuance increasing by 150 basis points to 6.4% since last year," added Panos Stergiou, head of Institutional Clients Group FIC EMEA and head of the SSA Coverage Group at Deutsche Bank. 

The market has seen the equivalent of 970 billion US dollars of issuance from sovereign, supranational and agencies (SSAs) this year, slightly up on last year’s bumper year with US$940bn, fuelled by governments’ needs to fund COVID rescue plans. Deutsche Bank is currently third in the SSA debt origination league table, up from seventh this time last year.

Breaking new green ground

The sovereign green bond news is the latest announcement in a busy few months for the bank with relation to its green finance offerings. Earlier this month, CTMfile reported that Deutsche Bank had executed its first green repo financing. 

The bank also placed its first green bond in the Formosa format, raising US$200m and attracting significant investor demand. Formosa bonds are foreign currency bonds issued in Taiwan. This transaction marked the first-ever USD green bond issued by an international bank in a dual-listing across Taipei and Luxembourg exchanges.

"The transaction underpins Deutsche Bank’s determination and commitment towards ESG financing," said Cynthia Chan, CEO and head of Corporate & Investment Bank for DB Taiwan. "It also reinforces the bank’s ability to navigate local markets to tap into opportunities to execute on its sustainability strategy."

The proceeds of the transaction are to help fund eligible green assets including renewable energy projects such as wind or solar power plants and the improvement of energy efficiency for sites such as commercial buildings.

Deutsche Bank also announced the successful execution of its first ESG-linked repurchase agreement (repo) transaction globally with Turkey’s Akbank. The US$300m transaction is also the first time ESG and sustainability targets have been attached to interbank financing in repo format in Central and Eastern Europe, Middle East and Africa (CEEMEA).

Akbank partnered with Deutsche Bank to structure and execute the transaction. Deutsche Bank developed the ESG-linked repo transaction to align Akbank’s existing sustainability efforts with its financing strategy. The structure of the transaction links the repo interest rate to Akbank’s performance with respect to three areas of ESG key performance indicators: 1) gender balance, 2) electricity sourcing of Akbank from renewable resources, and 3) no greenfield coal power plant loan origination.

"This first-of-a-kind regional transaction is evidence of our ESG structuring ability, expertise in designing ESG metrics, and commitment to working in partnership with a leading institution to create positive impact on society," said Orhan Ozalp, head of Global Emerging Markets (GEM) for Central and Eastern Europe and CEO of Deutsche Bank AS Turkey. "After this landmark deal, Deutsche Bank’s ESG-linked financing in Turkey will exceed 5 billion Turkish lira in the first six months of the year."