To the future
Societe du Grand Paris issued a €2bn 15-year green bond from its green EMTN programme in March that set a new benchmark and allowed the issuer to extend its green curve.
SGP was set up to finance one of Europe’s largest infrastructure projects: the Grand Paris Express automated metro system, an ambitious €35bn project that will see the city build four new underground lines to its suburbs.
The project is part of the French government’s commitment to carbon neutrality by 2050.
“This is one of the highest-profile projects that’s pure green,” said Nick Dent, head of debt syndicate for EMEA and Asia at Nomura. “It has a totally green financing programme and all the debt it issues will be green. This is an issuer leading the charge.”
SGP will create 68 energy-efficient stations, buy new electric trains and develop 18m square metres of real estate around the stations. It will create the world’s most digitally advanced metro carrying two million people a day.
The 1.125% 2034 15-year deal is the largest green or social bond to date for a French agency and will finance 200km of new 100% automatic lines that are being added to the existing Paris network.
The pivotal deal was also the largest of SGP’s three green benchmarks. It followed an inaugural 10-year deal in October 2018 and was followed by a €1bn 30-year in May, as SGP built a full liquid curve in an impressively short time.
SGP is the first issuer to adopt an EMTN programme entirely dedicated to green bonds, establishing a €5bn facility in July 2018.
“I can’t think of any other European issuer that only has a green curve and every deal will be green,” said Morven Jones, head of EMEA DCM origination at Nomura. “This is very rare.”
SGP is reaping the benefits of its green programme, which is allowing it to tap into the deepest pool of capital globally in euros, and issue large benchmark transactions relative to French agency peers.
Initial price thoughts on the 15-year deal were released at 34bp over OAT and orders topped €4bn when the book closed. The transaction was launched at €2bn with a spread of 31bp over OAT.
Lead managers were BNP Paribas, Natixis, NatWest, Nomura and Societe Generale. Around 150 accounts bought into the deal. Insurers bought 57% of the deal, banks took 19%. French and German investors accounted for 69% of the transaction, while there were also substantial orders from Asia.
SDP had an opinion from Sustainalytics and the Climate Bond Initiative.
“One year ago we were unknown, we have been extremely surprised by the outcome and warm welcome by all market participants,” said Vincent Gaillard, CFO of SGP. “We are seeing the benefit of being green.”
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