Région Ile-de-France is the first European Sub-Sovereign to issue an ESG benchmark bond with a negative yield on the financial markets

In order to fund its annual investment programme, in particular its regional recovery plan (€6.8bn between 2020 and 2022), Région Ile-de-France issued a new €500mn public bond on 12 April 2021.

Région Ile-de-France becomes the first European Sub-Sovereign issuer to print an ESG benchmark bond with a negative yield (-0.12%).

Investors demonstrated a massive support for this transaction, despite a negative yield, highlighting their confidence into the Région Ile-de-France’s credit. Indeed, the issuance attracted up to €3.5bn of interests, i.e. 7 times the amount announced, with a total of 114 orders. As a reminder, the previous record for the Région was €1.3bn in 2018 (in comparison, the raised amount was also €500mn). This record is now exceeded by +€2.2bn.

The Région keeps on diversifying its investor base with 16 jurisdictions participating in this new transaction. France, Germany, Italy and Switzerland accounted for more than 60 % of the interests. The bonds were allocated to buy and hold investors committed to sustainable financing.

This strong success confirms the Région Ile-de-France’s position as a European leader in sustainable financing. Since 2019, the Région is committed to issuing 100% of its funding programme in sustainable format, representing 80 % of its outstanding debt versus 35 % in 2015.

This is the first transaction of the Région issued under its updated framework for Green, Social and Sustainable bond issuance, aligning with the European taxonomy. In its Second Party Opinion, Vigeo ranked the use of proceeds, the selection and evaluation process, as well as the management of funds as “best market practices”.

Région Ile-de-France is also the first European Sub-Sovereign issuer to have engaged in the alignment of its framework to the upcoming European standards, contributing to the success of the transaction.

Despite the Covid-19 related economic crisis, the Région’s financial ratios will stay on a more favorable track in 2021 compared to 2015. The current margin rate would stand at 32.1% in 2021 (vs. 20.5% in 2015). The self-financing capacity doubled compared to 2015.

At the end of 2021, the outstanding debt will be in line with the 2015 level. As a reminder, between 2004 and 2015, it increased by an average annual rate of + 10 %. At the end of 2021, the debt payback ratio should amount to c. 4.5 years, way below its late 2015 level (7.5 years).

Thanks to a tight operational expenditure control since 2016 (- €2bn in multi annual expenditures), the Région Ile-de-France was able to face the Covid-19 crisis with a solid financial position.

The Région has received the best rating possible at this time in France, in line with the Republic of France (Fitch “AA” and Moody’s “Aa2”). Fitch affirmed its rating on Friday 9 April, highlighting that: “Ile-de-France has tight control of expenditure, as reflected by a continuous decline in operating expenditure in the last years” […] “Ile-de-France’s liabilities carry little risk” […] “[its] debt payback ratio remained sound in 2020” […] “despite the impact of the pandemic” […] “In 2020, net adjusted debt declined for the third year in a row”

In March 2021, Région Ile-de-France received the Capital Finance International – CFI.co – « Best sustainability bond issuer – France » award.

The Dutch Fund for Climate and Development open for business

The Hague, November 15, 2019 – The Dutch Fund for Climate and Development (DFCD) has officially been launched in the presence of government officials, NGOs, investors, politicians and other interested parties. In May of this year, the DFCD was awarded to the consortium of Dutch development bank FMO, SNV Netherlands Development Organisation (SNV), World Wide Fund for Nature (WWF-NL) and Climate Fund Managers (CFM). “Today’s launch means that the DFCD is officially open for business,” said Linda Broekhuizen, Chief Investment Officer at FMO. “The consortium is keen to connect with innovative entrepreneurs with climate-related businesses and with private investors keen to mobilize much-needed funding from the private sector to join us in our mission to create a more climate-resilient world.”

Climate change is one of the biggest challenges we face today. It is already affecting people and nature across the globe, with developing countries being most impacted. “The poorest communities are the most vulnerable to climate change. Poor farmers and others at the bottom of the pyramid suffer and lose their livelihoods even with small changes in rainfall patterns or temperature”, as Meike van Ginneken, Chief Executive Officer at SNV explained.

There is an urgent need for investment to enable vulnerable communities and ecosystems to adapt to climate change. Carola van Rijnsoever, Director of Inclusive Green Growth, and Ambassador for Sustainable Development, Dutch Ministry of Foreign Affairs, said: „The challenge we face to help communities adapt to and mitigate the effects of climate change is enormous, and the case for action is incredibly clear. We cannot do this with governments alone. We need all stakeholders to be strong enough to confront this challenge. The set-up of this consortium in which finance and NGOs come together, is unique and uniquely positioned to do this.“ The government of The Netherlands has committed to addressing this need through the DFCD, making EUR 160 million available in the period 2019-2022 for climate adaptation and mitigation, of which at least 50% is earmarked for climate adaptation projects.

DFCD is a direct response to the increasing demand for climate adaptation projects that have to date suffered from a lack of funding compared with mitigation efforts. Linda Broekhuizen adds: “In 2018, USD 612 billion was invested in climate mitigation which is important and much needed. In contrast however, only 5%, USD 30 billion, was invested in adaptation. Adaptation may have to be USD 180 billion a year if the 2030 goal is to reach the USD 1.7 trillion as required according to the most recent report of the Global Commission on Adaptation.”

To help bridge this funding gap the DFCD aims to mobilize upwards of EUR 500 million from private sector investors. Andrew Johnstone, Chief Executive Officer of Climate Fund Managers adds: “The opportunities are there. Take water for example: 80% of the world’s wastewater enters rivers and oceans untreated and by 2025, half of the world’s population will be living in water stressed areas. Neither the private nor the public sector is doing enough, but together the investment potential is enormous, as is the impact to be delivered.”

This partnership of NGOs and financiers seeks to develop and finance sustainable private sector solutions to enhance resilience to the effects of climate change. These projects will boost the health of freshwater, forest, agricultural and ocean ecosystems, and improve water management.

“The consortium takes a landscape approach through investing in projects which are planned in an inclusive manner, and build on a solid understanding of the landscape, ecosystems and communities. In this way these projects will contribute to healthier ecosystems,” said Kirsten Schuijt, Chief Executive Officer of WWF-NL. “New and incredibly exciting in this consortium is that there is early-stage funding available to convert adaptation opportunities into bankable projects.” 

WWF and SNV take on the key role of developing climate-relevant projects from an early-stage idea to a bankable business case. Climate Fund Managers and FMO provide investment capital, delivering projects to full operations. This combination of early-stage involvement with full life-cycle funding will ensure lasting, long-term impact that contributes to the Paris Agreement and the United Nation’s Sustainable Development Goals (SDGs).

Interested parties can contact the DFCD through: www.thedfcd.com.

The Dutch Fund for Climate and Development open for business
In picture from left to right the DFCD partners at the official launch event in The Hague: Andrew Johnstone, CEO of Climate Fund Managers, Kirsten Schuijt, CEO of WWF-NL, Linda Broekhuizen, CIO of FMO, Albert Bokkestijn, project manger DFCD at SNV, Carola van Rijnsoever, Director of Inclusive Green Growth, and Ambassador for Sustainable Development, Dutch Ministry of Foreign Affairs.

In picture from left to right the DFCD partners at the official launch event in The Hague: Andrew Johnstone, CEO of Climate Fund Managers, Kirsten Schuijt, CEO of WWF-NL, Linda Broekhuizen, CIO of FMO, Albert Bokkestijn, project manger DFCD at SNV, Carola van Rijnsoever, Director Inclusive Green Growth, and Ambassador Sustainable Development, Dutch Ministry of Foreign Affairs.