Telefonica, Bankinter, E.ON or Engie have contracted their services.
The Covid-19 crisis has left nothing unscathed. Neither does the green bond market. The global placement volume has plummeted in March and the accumulated volume in the first quarter is not even 10% of what is expected for all of 2020. But even in this context, two Spanish banks have managed to improve positions and break through the great placers of sustainable emissions. They are Santander and BBVA and both are among the 20 largest in the world.
The most prominent position is for the bank chaired by Ana Botin, according to Bloomberg’s first-quarter ranking, which excludes bonds for project financing and municipal issues. Santander closed March as the eighth most active bank in the world, with eight operations under arm and an attributed volume of more than 1,200 million euros. Its share is 3.7% of the total bonds issued on the planet following the criteria established by the International Capital Market Association (ICMA), which houses within it the committees responsible for establishing the principles of green bonds. , social and sustainable.
This brand represents a significant leap from last year, when Santander failed to place itself in the group of the top 20 entities. Now it has gone directly to the top 10 of a ranking led by Credit Agricole, BNP Paribas, JPMorgan, Barclays and Bank of America.
“Green bonds are one of the most used financial instruments to channel the flow of financing towards the green economy, since they make it possible to trace investment. From Banco Santander we act as an issuer (in 2019 we issued the first green bond for a value of 1,000 million euros) and we help our clients to issue these instruments, «says Federico Gomez, global director of Sustainability at Santander.
With six operations under its belt, BBVA is the next Spanish bank on the list. It is in the eighteenth position, after advancing from the 25th of twelve months ago and the 19th at the end of 2019. Its market share is close to 2%.
Telefonica, Bankinter or Adif are among the Spanish companies that have put themselves in the hands of Santander or BBVA to carry out their green bond issues in the first quarter, but they are not the only ones. The Cantabrian bank has participated in multi-million dollar operations in Latin American countries such as Argentina, whose companies are gradually opening up to sustainable financing, and has also worked with European energy giants, such as E.ON.
BBVA has also been in the placement syndicate of the German power company and also has a good handful of clients beyond the Pyrenees. Its participation in the macro-issue of 2,500 million in green bonds of the French Engie or in the premiere in sustainability of the American Pfizer give proof of this.
“Expectations for 2020 indicated that the green, social and sustainable bond market would register a strong boost and the truth is that, despite the volatility and uncertainties generated by the pandemic, it has shown a good trend, in number of operations and new issuers », explains Angel Tejada, head of green and sustainable bonds at BBVA.
This does not mean that the health catastrophe has not influenced. “The beginning of the Covid-19 crisis has meant that the focus of issuers has shifted towards more immediate considerations, such as ensuring liquidity,” he adds. In any case, «medium- and long-term trends will continue to focus on sustainability strategies and, therefore, there will be more examples of green, social or sustainable operations in the market. Specifically, Spain continues to be a geography whose issuers support and choose this type of asset, “he says.
“The transition to a low carbon economy is key in the context of climate change and the banking sector plays a determining role, while presenting challenges and investment opportunities,” highlights the Santander executive. “Our objective is to finance or facilitate the mobilization of 120,000 million euros between 2019 and 2025 and 220,000 million euros between 2019 and 2030 to combat climate change.”
Forecasts to meet
For now, the volume of green bonds is far from the expectations that had been set for the year. The Climate Bond Initiative has put at 350,000 million dollars (about 322,000 million euros) the expected volume for 2020 and the first quarter has remained at 34,000 million dollars. However, in the few days that passed in April and despite the holidays, the placements were encouraged again.
The green loan market is also active and the two large Spanish banks also occupy prominent positions in global rankings. Santander is the fifth in the world for granting green loans where the money is specifically destined to finance sustainable projects (which leaves out the credits linked to the improvement in environmental or social matters of the company) and the first in the EMEA region, which computes operations in Europe, the Middle East and Africa.
In this Bloomberg classification, the Spanish presence is high. BBVA is also in the top 15, accompanied by Bankia and CaixaBank. Of course, these types of loans represent only 20% of total sustainable financing and operations have suffered from the emergence of Covid-19, so volumes are small.