Berlin Hyp breaks new ground with sustainability-linked bond
Berlin Hyp – one of Germany’s leading real estate and Pfandbrief banks and a pioneer in the sustainable bond market – has issued the first-ever sustainability-linked bond out of the financial sector. The bond is based on Berlin Hyp’s ambitious sustainability agenda and combines it with the bank’s funding activities in the debt capital markets. The transaction was proudly supported by Commerzbank as a joint bookrunner.
The 10-year Senior Preferred transaction was announced last Friday and was placed on Tuesday, following two days of investor marketing. The offering attracted strong demand of more than EUR 790 million, which allowed the issuance to close at EUR 500 million with a coupon of 0.375%.
Berlin Hyp’s inaugural sustainability-linked bond is linked to the ambitious target of a carbon intensity reduction of the loan book by 40% by 2030, based on 2020 figures – a target that demonstrates clear commitment to the Paris Climate Agreement and to the German climate path. The carbon intensity of the loan book is defined as the ratio of the aggregated CO2 emissions from all commercial real estate financed, by total financed areas. If this target is not reached, the bond coupon rate will increase by 25 basis points for the final year.
Berlin Hyp is Europe’s most active sustainable bond issuer in the banking industry, with close to EUR 6 billion in outstanding green bonds. The transaction was issued based on the company’s new framework for issuing sustainability-linked bonds, which it developed in compliance with the ICMA Sustainability-Linked Bond Principles.
Mirko Gerhold, Head of Corporate Bonds Origination & Solutions at Commerzbank commented, “We are delighted to have played our part in this important transaction, which expanded the sustainability-linked bond market to the financial sector. Reaching climate neutrality by 2050 requires a huge degree of financing and commitment across all industries. We hope that Berlin Hyp’s latest issuance will see many followers and help to grow the market further, in order to mobilise funding to reduce emissions and fight climate change.”