by the Climate Bonds Team
German green debt instrument raises €550m ($621m) for wind energy and gains Climate Bonds Certification.
German wind company Nordex (NRDXF) is the first Schuldschein issuer to label its issue as green.
The green issue is verified under the Climate Bonds Standard and sector specific Wind Standard. Assets include wind power manufacturing and infrastructure around the world. Nordex employed DNV GL to verify the green Schuldschein against the Climate Bonds Standard.
The deal was split across four tranches with 3, 5, 7 and 10 year tenors. The joint underwriters were Unicredit, Bayerische Landesbank, BNP Paribas, Commerzbank and HSBC.
You may be wondering at this point – “but what is a Shuldschein?”
Green Schuldschein are similar to Green Bonds…
Schuldschein are privately placed debt instruments similar to bonds and loans, except investors almost always hold them to maturity. They can have either a fixed or a variable coupon (interest rate).
…But there are differences:
- Schuldschein loans, which traditionally originate from the German market (hence the Germanic label), are not traded in a market nor listed on a stock exchanges; that makes them more like a loan than a bond.
- Since they are usually unrated and unlisted, hence making them cheaper to issue.
- Because Schuldschein are not marked-to-market they avoid exposure to volatility in the bond market.
- They’re usually – except in really bullish bond markets – priced lower than comparable bonds trading in the secondary market. In fact they’re not eligible for deposit in clearing systems and cannot be listed on stock exchanges.
(However, it is worth noting that a Schuldschein can be traded in the private and bilateral market where there’s a buyer and willing seller.)
Because of these differences an issuer may opt for financing via a Schuldschein rather than bonds.
Who are the issuers of Schuldschein loans?
Historically, German government institutions were the main issuers of Schuldschein loans followed by financial institutions. In recent years’ German corporates have increasingly been getting in on the act followed by international issuers.
Who buys them?
Banks, insurance companies and increasingly institutional investors are the main buyers of Schuldschein.
Going green is a great step for the multibillion EUR corporate Schuldschein market
This certified green Nordex issue is the first green Schuldschein to date.
And with a total issuance of corporate Schuldschein loans of more than EUR19bn in 2015 there is plenty of potential for additional green issues in the market in the near future.
Gut Gemacht Nordex!
The Climate Bonds Team includes Sean Kidney, Tess Olsen-Rong, Beate Sonerud, and Justine Leigh-Bell.
The Climate Bonds Initiative is an “investor-focused” not-for-profit promoting long-term debt models to fund a rapid, global transition to a low-carbon economy.