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Macroeconomics> Bonds 02 Jul 2021

BBVA's social bonds issued in 2020 have helped more than 15,100 businesses through ICO loans in Spain

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BBVA placed €1.04 billion through two social bonds in 2020, the funds of which were mainly used to help micro- and small companies through ICO-guaranteed loans, in the case of Spain. In total, 15,175 companies with a total of 207,628 employees have benefited. This is shown in the 'BBVA 2020 green and social bond report'. The report highlights that, since the 2018 publication of the framework for issuing bonds linked to the Sustainable Development Goals (SDGs), the emission of more than 2.3 million tons of CO2 into the atmosphere has been avoided, through the projects financed with BBVA's green bonds in 12 countries; a figure that is equivalent to the annual emissions of nearly 913,000 cars.

At the end of December 2020, BBVA's total eligible social portfolio amounted to €2,268 million. Sixty percent of the loans identified originated in 2020 and 21 percent in 2019. Last year, BBVA made the first issue of a COVID-19 social bond by a financial institution in Europe, amounting to €1 billion, and carried out a €40 million social private placement. The majority of the social portfolio relates to financing for SMEs (55 percent), health (21 percent) and social inclusion (19 percent). The remainder is divided between affordable housing, education, economic inclusion and other social projects.

The funds received from social bond issues amounting to 1,040 million euros have been mainly used to finance micro and small companies through ICO-guaranteed loans, which have benefited up to 15,175 companies and a total of 207,628 employees. These 1,040 million euros form part of the almost 20,000 million euros of ICO-guaranteed financing managed by BBVA up to May 31. By social and territorial impact, 83 percent of the total amount has been allocated to companies that have suffered a strong or significant impact due to COVID-19. Likewise, 69 percent was allocated to companies located in areas with a high potential social impact.

Strong growth in eligible green finance portfolio

In relation to green bonds, as of December 2020, the BBVA Group's total eligible green portfolio amounted to €4,009 million, representing a 44 percent growth compared to the end of 2019, and 268 percent more compared to the end of 2018. 40 percent of the portfolio corresponds to financing renewable energy projects, 26 percent to sustainable transport, 21 percent to energy efficiency and the rest to waste (11 percent) and water (2 percent) management.

Of this total eligible portfolio, €3,063 million worth of projects have been financed, which have prevented the emission of 2,306,475 tons of CO2 into the atmosphere since 2018, equivalent to the annual emissions of 912,877 cars. Likewise, a 19,105,070 cubic metre volume of water has been treated, equivalent to the annual water consumption of 393,554 Spaniards, and a waste volume of 642,342 tons has been managed, equivalent to the annual waste generated by more than 1.3 million Spaniards.

77 percent of the green loans identified have originated in the last two years; 72 percent of the volume corresponds to financed operations and the rest to operations that have seen some changes in their terms and conditions. Geographically, the bulk of green financing has taken place in Spain (60 percent), France (10 percent), UK and Ireland (8 percent), Australia (7 percent) and Italy (6 percent).

BBVA has become one of the most active banks in green bond issuance since the publication of its framework for SDG-linked bond issuance in 2018. Following its inaugural bond, in 2019 the bank issued a second green bond and the first green bond structured using blockchain technology. In May 2020, BBVA was the first private financial institution in Europe to issue a COVID-19 related social bond and, two months later, it was the first financial institution in the world to issue €1 billion of contingently convertible perpetual bonds (CoCos) with the status of green bonds to finance eligible green assets in BBVA's portfolio.

In 2019 BBVA defined "helping customers transition to a sustainable future" as a new strategic priority. Within this context, the issuance of green and social bonds plays a key role in achieving BBVA's objectives. Sustainable origination allows the bank's customers to be supported in their transition to a low-carbon economy, while progressively contributing to the alignment of the bank's activity with the objectives of the Paris Agreement.

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