UK insurance firm Just Group has announced it is the first in its sector to issue a green bond to facilitate investments into green assets.
The group has issued the £250m green bond to support its investments in green buildings, renewable energy and clean transportation, in a push to increase its green credentials and also influence the wider the industry.
David Richardson, group CEO of Just, commented: “Just has always been a market disruptor with a strong social purpose and so we are delighted to launch this Green Bond – the first of its kind in the UK insurance sector.
“ESG factors have long been a prime consideration in our investment decisions and are reflected in our significant financing of renewable energy such as the Walsey and Hornsea wind projects and other positive social impact investments.
“The financial services sector bears a weighty responsibility in leading the country towards a more sustainable way of life, and the green bond enshrines our commitment to supporting the transition to a low-carbon global economy.”
Just Group has £360m invested in offshore wind and solar farms, and over £250m in social housing and local authority loans. It also said it launched the UK’s first ever Green Lifetime Mortgage in July, offering discounted rates to reward customers with energy efficient homes.
Its green bond is a sterling-denominated fixed rate reset subordinated tier 2 offering due 2031.
Global Switch issues first green bond
At 10-year green bond has been issued by the data centre operator Global Switch raising €700m despite paying a coupon of only 1.375%.
This is the first such issue by the company, which has operations in Europe and Asia Pacific. It will mature on 7 October 2030, and extends the overall debt maturity from 4.2 years to 6.2 years.
The new bond was well supported by institutional investors and as well as extending the maturity on the debt it will reduce the overall cost from 2.6% to 2.2%.
The issue was compliant with the European Central Bank’s corporate sector purchase programme (CSPP) and achieved green bond certification, and the proceeds will be used to strengthen the firm’s balance sheet further.
Global Switch, founded in 1998, is currently rated at BBB, Baa2 and BBB by the three major ratings agencies – Fitch, Moody’s and S&P Global Ratings, respectively and is one of the highest credit-rated data centre companies in the world.
The last stage of Global Switch’s Hong Kong data centre is scheduled for completion before the end of 2020, while stage one of its Amsterdam East data centre is also nearing completion.
The green bond issue forms part of Global Switch’s strategy to be climate neutral across its portfolio by 2030 through helping to fund emissions reduction and the development of more energy efficient data centres.
According to the International Energy Agency (IEA), in 2018 data centres worldwide consumed around 200 TeraWatt hours (TWh) – equivalent to two-thirds of the entire United Kingdom’s electricity annual consumption or about 1% of global electricity use.
John Corcoran, chief executive officer of Global Switch, said: “The launch of our inaugural green bond is a further building block in our long-term sustainability strategy. We intend to use the proceeds to accelerate our organic expansion strategy, to improve our carbon footprint and to support the needs of our customers through the design, development and innovation of new green data centres which deliver the highest standards of energy efficiency.”
Over 50% of Global Switch’s global footprint already benefits from renewable energy power generation and a number of our data centres have received at least one or more green building certifications.
While green bonds represent a fraction of the overall global bond market, the sector is poised for issuance growth against the backdrop of Covid-19. This is on the back of a record issuance in 2019, and a further strong Q1 2020.
A total of $263bn of green bonds were issued last year, up from less than $1bn a decade ago, according to figures from Moody’s, while the period from 12 January to 27 May saw green bond market issuance had hit $69.3bn.
In a report written by UBS global wealth management’s chief investment office team it was predicted green, social, and sustainability bonds will see further growth on the back of the global pandemic. The team forecast the size of the green bond market will likely hit £1trn during the first half of 2021.
The report said: “We think green bonds will receive more attention during the economic recovery phase, particularly in Europe where the EU alone plans to issue about €225bn of green bonds over the next five years. New issuance in 2021 is likely to surpass $300bn, in our view.”