AIB raises €1bn in first green bond by Irish bank

AIB said on Wednesday it has become the first Irish bank to complete a green bond issuance. 

“The €1bn proceeds from the green bond will further strengthen AIB’s regulatory capital position and contribute to the financing of projects with clear environmental and climate change benefits …” said AIB.

“The €1bn print is AIB’s largest unsecured transaction since the financial crisis. 

“It priced at +330 basis points over the mid-swap, which is a minimal new issue premium.

“The book saw strong momentum immediately from announcement into a firmer market, with the book peaking over €2.5bn. 

“There was impressive uptake from key accounts across Europe and the UK, with 150 individual investors in the book, including high quality green investors.”

AIB said it is only the second European bank to raise supplementary capital (so-called Tier 2 capital) by issuing a green bond.

It said banks that issue green bonds use the funds raised to finance or re-finance eligible green projects such as renewable energy projects, low carbon offices and the construction of energy efficient homes.

In order to be labelled green, the AIB bond must comply with the International Capital Markets Association’s Green Bond Principles governing the use of the bond proceeds and related transparency and reporting requirements.

AIB chief executive officer Colin Hunt said: “AIB’s first green bond offers socially responsible investors an opportunity to support AIB as it continues to transition its business towards greater environmental sustainability and support its customers on the journey to a low-carbon future.

“This transaction represents a major vote of confidence by investors who are willing to provide us with new capital because they recognise that AIB has been leading the way in the transition to a green economy, not only at an Irish level, but at European level.

“As the first Irish bank to successfully complete a greenbond issuance we are reaffirming AIB’s commitment to being a sustainable and strongly capitalised bank.

“Through our actions, from our green mortgage product, to our €5bn green lending fund, weare determined to play our part in enabling a sustainable economic recovery.”