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Investment bank 05 Feb 2018

2017, the year of green loans

Green loans have arrived in force on the world’s financial markets. The volume of these sustainable products, which up to now had appeared sporadically, has shown a marked increase since last year. BBVA ended 2017 as the most active company in green loans worldwide, with a total of 11 transactions in Europe and Latin America for clients in a range of sectors, and was the undisputed number one in Spain.

Apart from the recent rise in social awareness, improvements in liquidity conditions have had direct repercussions on the growth of the market for green finance instruments and led to a record-breaking volume of transactions. This is the backdrop for the boom in green loans, a source of bank funding that seeks to promote environmental sustainability and is governed by the same principles as green bonds: the Green Bond Principles.

The formalization of green loans in all their formats has progressively assumed greater importance in financial markets around the world, particularly in Spain, where they have been consolidated in the energy sector. Ten Spanish companies and institutions obtained 3 billion euros through this method of sustainable funding in 2017. Today, the first green loan in 2014 by Sainsbury’s, the English supermarket chain, is just a distant memory. Some $200 million have been loaned to carbon reduction, clean energy and water-saving projects. This phenomenon has undoubtedly paved the way toward a new era of green debt instruments.

Fotografia de recurso, paneles solares y molinos de viento, finanzas, BBVA

Ten Spanish companies and institutions obtained 3 billion euros through this method of sustainable funding in 2017.

BBVA, spearheading the market for green loans

BBVA has done an excellent job of making a name for itself as the bank of reference in sustainable finance. The bank was involved in half the bilateral green loans signed last year, and has provided significant support for the five syndicated loans to be approved.

Last February, BBVA made history when it signed a bilateral green loan for Iberdrola. Not only was this the first transaction of its kind for an energy company on a worldwide scale, the amount –500 billion euros– was the highest ever recorded. BBVA also headed the first green syndicated finance worldwide in a loan format, signed with the Spanish paper company Tradebe.

BBVA was involved in half the bilateral green loans signed last year.

The year 2017 also saw the arrival of the first green loans in project finance format. BBVA played a key role by coordinating the first green project finance in Spain (a new hospital in Vigo). It chalked up another global first by signing the first green loan with a project finance structure, with the Italian energy company Terna.

In 2018, BBVA has undertaken to reinforce its commitment to green initiatives. Evidence of this can already be seen in two transactions in the green revolving credit facility format, which were recently undertaken with Iberdrola. The energy company has signed two new sustainable syndicated loans for a total of 5.3 billion euros, the largest ever on a global scale.

An encouraging future for the green loans market

Previous forecasts by BBVA already augured a significant increase in green loans, and 2017 brought irrefutable proof of this growth. This outlook is shared in the financial sector, where experts view the future of these green finance services with considerable optimism and expectations of continued growth, possibly even achieving the volume of green bonds. So BBVA is looking to promote and enable these sustainable investments and to continue to spearhead green finance markets around the world.

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