Strong investor demand shows potential for local project finance.
The European Bank for Reconstruction and Development (EBRD) has taken the role of anchor investor in a Latvian green bond issue, while also investing in a green bond issued by Raiffeisen Bank Romania.
Latvenergo AS, Latvia’s state-owned energy utility, has issued the first tranche of bonds under a €200m green bond programme for an ambitious programme of projects to transition into a sustainable, modern electricity network and to upgrade Latvia’s hydropower plants.
The proceeds raised from the bond issuance will be used to integrate more renewable sources into Latvia’s electricity network, mainly in the form of solar and wind projects. The EBRD invested €50m as anchor investor and the bond received a “dark green” rating – the most stringent category under which the Centre for International Climate and Environmental Research found it to correspond with a long-term vision of a low-carbon and climate-resilient future.
At the same time, the EBRD invested €11m in a green bond issued by Raiffeisen Bank Romania, a subsidiary of Austria’s Raiffeisen Bank International. The bond, which is the first green bond issued in Romania, attracted €81m to finance environmental projects and was significantly oversubscribed among investors.
Mark Davis, EBRD regional director for Romania and Bulgaria, said: “The EBRD remains at the forefront of efforts to strengthen Romania’s capital markets. Today we are pleased to back the country’s first green bonds. This pioneering move by Raiffeisen will pave the way for the creation of more securities intended to support sustainability, as the strong market reaction indicates.”
The EBRD aims to become a majority green bank and dedicate more than half of its work to climate finance by 2025.