BBVA reinforces its leading position in the European sustainable bond issuance. On this occasion, the bank has acted as sole green structurer and bookrunner for the successful issuance of the green bonds of Scottish Hydro Electric Transmission plc (SHET), an electricity transmission company and subsidiary of SSE plc. With this dual tranche transaction, the company consolidates its position as the UK’s most active utility in ESG bond financing.

BBVA’s Turkish unit renews its syndicated loan in international markets as part of its international debt program.

Green bonds have been building a solid reputation among investors. Since December 2019 green bonds can be traded openly and transparently online. This is how the Nasdaq Sustainable Bond Network (NSBN) – the first electronic marketplace where professional traders can buy and sell sustainable, social and green bonds – works.

If the context in which banks and companies interacted last year was already complicated due to the political and economic uncertainty, combined with the low interest rate scenario, the arrival of the COVID-19 pandemic last March further complicated this context by forcing nearly everyone into lockdown. Investment banks were a key component for the survival of large corporations. Jose Ramón Vizmanos, the Head of Global Client Coverage at BBVA Corporate & Investment Banking, explained this to the financial newspaper Cinco Días in an interview this summer.

Growing interest in sustainability across all segments of society has led to innovations in sustainable finance offerings, specifically in the world of corporate financing. Issuances of bonds linked to sustainability criteria are among the latest market developments. Analysts at BBVA Global Markets Research explain the basics and share with us their view of the product.

BBVA placed a €1 billion  inaugural COVID-19 social bond on the market today, making it the first private financial institution in Europe to do so. Demand was close to €5 billion, nearly five times more than the initial offer. The funds will be primarily allocated to mitigating the severe economic and social impact caused directly and indirectly by the COVID-19 pandemic. The interest rate was set at 112 basis points over mid-swap, 33 basis points below the initial target price (145 bps over mid-swap).

Social bonds, as debt instruments that enable project financing with a positive social impact, have been gaining traction among issuers in recent years. In 2019, these kinds of issuances outpaced previous volume records, and issuance activity of this type will undoubtedly be driven by the COVID-19 pandemic in 2020. This is the view of analysts at BBVA Global Markets Research.

BBVA acted as the sole advisory bank and bookrunner in the issue of the bond, Spain’s first in support of the public health system and to combat the COVID -19 outbreak. The bond, issued by the Community of Madrid, was entirely by Spanish insurer MAPFRE, will be the underlying asset of MAPFRE Compromiso Sanitario, the three-year asset-backed fund announced earlier this week by MAPFRE AM.

The 2019 bond market was marked by record levels of bond issuance, exceeding the 2018 volume issued in Spain by 29 percent. Also noteworthy, the green, social, and sustainability bond issuance activity saw impressive positive performance, with a volume of close to €230 billion worldwide. BBVA stood out as the most active player with a green bond issuance volume of above €3.3 billion.

Garanti BBVA recently took part in Turkey’s 2019 Bonds, Loans & Sukuk Conference in Istanbul, where participants discussed the latest developments in bonds, syndicated loans and ‘sukuk’ markets. Sukuks are financial certificates, similar to bonds, that comply with Islamic law, or Sharia principles.

Banks and investors as starting to awaken to the benefits that can derive from the use of blockchain technologies in bond issues, including green bonds. BBVA and Spanish insurance company Mapfre partnered early this year to arrange the issue of a pioneering blockchain sustainable bond. The technology allows to cut costs, increase efficiency and ensure full transparency.

Generali has just issued, together with BBVA and seven other banks, its first green bond amounting to 750 million euros. This is the first bond from a European insurance company and the largest to date. BBVA acted as deal manager and joint bookrunner.

Garanti BBVA successfully issued the first bond indexed to the Turkish Lira Overnight Reference Rate (TLREF), an interest rate which has served as a new benchmark since its launch in June of this year.

BBVA issued a $1 billion contingent convertible bond (CoCos), with demand exceeding by almost eight times the initial offer ($7.8 billion) and more than 410 orders from investors. High demand for the issuance allowed it to close at a very attractive price, with a coupon of 6.5 percent in dollars (0.50 basis points below the initial price of 7 percent), which is equivalent to a 4-percent coupon in euros.

BBVA – with Deloitte and PCS acting as independent third parties – has completed the first issuance of securitized bonds in Spain, which will be registered with the ESMA (European Securities and Markets Authority) as Simple, Transparent and Standardized (STS).  With this securitization, BBVA takes advantage of European regulation in force since January 1 that will confer preferential capital treatment to financial institutions issuing STS securitizations.

This Wednesday, BBVA successfully completed its second green bond issue in the wholesale debt market – the first one was in May 2018 – for the same amount, €1 billion, and with the same instrument and maturity. The transaction drew a very positive reaction from investors, with book orders exceeding €2.7 billion, a figure similar to the one reached last year. Excess demand made it possible to lower the price to mid-swap plus 103 basis points, from the initial range set at 120-125 basis points. This price entails a new zero new issue premium, just as in its first green bond issue.

This week marks yet another milestone for BBVA in the European green financing arena. ESB, the leading Irish Utility, has chosen BBVA to act as green structuring bank and joint bookrunner in their inaugural EUR 500 million green bond. This is the first ever green bond issued by an Irish corporate and the net proceeds from the transaction will be destined to finance eligible green projects, mainly under the following categories: renewable energy, energy efficiency, clean transportation and green buildings.

Bonds are credit instruments used by companies in need of financing. The company in question issues this debt product in order to obtain liquidity from the financial markets. But how does a bond issue take place? What steps must be followed from the moment the company decides to issue a bond until their subsequent placement and sale on the market?

In 2018, there was declining activity in the bond business due to an increase in market volatility. In Europe, the total volume of issued bonds totalled €1.47 trillion, approximately 10% less than in 2017. Furthermore, 2018 witnessed the consolidation of trends like green bonds –  which have been on the market for more than ten years now – and the emergence of products related to new technologies.

Julián Romero is Head of the Sustainable Bond Group in BBVA’s lending department. As Head of this group of experts whose mission is to bring BBVA’s clients opportunities related to sustainable finance in the capital markets, he gives us an analysis of the potential of green bonds in Latin America.

2018 has been a year of consolidation for green, social, and sustainable bonds as sources of financing in capital markets, as their solid growth demonstrates. So far, the global market for these sustainable financial instruments has reached the equivalent of €71 million euros, according to Dealogic. In Spain alone, the volume of green bonds issued in 2018 has already exceeded the amount issued in 2017.

What does it mean when we say a bank is the ‘bookrunner’ for a deal? Or if a financial institution has acted as the ‘lead manager’ or ‘lead arranger’? These are just some or the roles that banks can play in bond issuances and loan transactions.

BBVA Group unit Garanti Bank in conjunction with the World Bank’s International Finance Corporation (IFC) has issued a six-year social bond worth $75 million dollars to help finance women entrepreneurs in Turkey.

Bonds and loans are financing instruments used at one moment or other by companies during the course of their existence. These are two conceptually different credit products that are sometimes confused. It is important to differentiate between both means of financing and understand their characteristics in order to know their true essence.

BBVA has teamed up with several global banks to become a member of the Standard Repackaging Documentation platform (SRD). This initiative is a response to investors’ demands for standardization of repackaging transactions. BBVA is the only Spanish bank involved.

Over the past three years, the asset allocation team of BBVA Asset Management has overhauled its investment process to bring as much objectivity as possible to decision-making when building a portfolio. Based on the principles of behavioral economics, the new process aims to determine how the power of the mind affects financial decisions.

During 2017, their tenth anniversary year, green bonds marked a new record for issuances. The growing awareness of companies and investors about these assets, along with the high level of liquidity in the system, pushed the volume of green issuances in 2017 to $131 billion—a 52% increase over 2016.

Today marks the second anniversary of death of David Bowie, a pop icon who needs no introduction. Hundreds of lines have been written about his life, career and concerts. But what many are not aware of is that Bowie was also a pioneer in the financial world: he was the first artist ever to issue a “celebrity bond.”