Germany Hires Deutsche Bank, DZ Bank for Update of Green Bond Framework
Deutsche Bank and DZ Bank announced that they have been mandated by the Federal Republic of Germany as joint ESG coordinators for the planned update of the government’s Green Bond Framework.
Germany released its initial Green Bond Framework in 2020, which sets out its environmental and sustainable finance objectives, management of green securities, eligible use of proceeds, expenditure evaluation and selection process, and reporting obligations for green bond issuances.
The government has been one of the most active sovereign green bond issuers since its initial €6.5 billion, 10-year green bond offering in August 2020, with over €73 billion green bonds now outstanding. Proceeds from green bond issuances are allocated to expenditures in the Federal budget that have an environmental impact.
Marcus Pratsch, Head of Sustainable Bonds and Finance at DZ Bank said:
“The issuance of Green Federal Securities is an important part of the German Sustainable Finance Strategy and thus of Germany’s position as an international sustainable finance centre. We are pleased about the trust placed in us and the opportunity to support Germany as a leading financial centre in the important area of sustainability”.
As part of its efforts to help develop the sustainable finance market, Germany launched a “twin bond” concept with its inaugural 2020 offering, by matching its green bonds with existing conventional securities with matching characteristics, including maturity and coupon, in order to highlight the value of the sustainability characteristics of the green securities, or the “greenium.”
Kai Poerschke, Senior VP SSA Origination at DZ Bank, said:
“The Twin Bonds concept with its Green Bond respectively conventional twin has already found great demand from all groups of national and international investors. The quality of the Green Bond framework, the extremely strong ratings of the issuer and the outstanding liquidity of the bonds are strong arguments which convince market participants.“
According to Deutsche Bank and DZ Bank, the new green bond framework is expected to be finalized and published in 2025.