Standard Chartered has priced a €500 million (US$568 million) sustainability bond focused on emerging markets. The proceeds of the bond will be used to provide finance in areas aligned with the United Nations Sustainable Development Goals (SDGs) – including clean energy projects, smaller business lending and microfinance loans – helping drive employment, growth and prosperity across emerging markets.

This is an urgent problem that needs addressing because emerging markets face a US$2.5 trillion annual investment gap in meeting the SDGs. Whilst 90 percent of the SDG financing needs are covered in developed countries, only 60 percent of the investment needs are addressed in emerging and developing regions, and as low as 10 percent in Africa.

Daniel Hanna, global head, Sustainable Finance, says, “Beyond China, only a very small percentage of green and social bonds have been issued to finance emerging markets. It is these countries’ pathway to a low carbon future that will have a major impact on the world’s ability to meet the Paris Agreement’s goal of keeping global warming below 2 degrees. We see growing investor appetite to finance sustainable development in Asia and Africa, but this is often hampered by elevated risk perception and a lack of investable opportunities. This transaction is an important first step in an intended programme of green, social and sustainability bond issuance to support our sustainable finance strategy.”

Henrik Raber, global head, credit markets, says, “This landmark transaction was very well received by the market, generating an orderbook which peaked north of €3 billion (six times subscribed), driven by a strong technical demand for EUR assets. The lion’s share of orders came from some of the largest European and global real money investors, including a high proportion of sustainability, social and green bond focused funds.”

Richard Staff, head of capital issuance and term funding, says, “Standard Chartered has the flexibility to raise wholesale funding in a wide variety of currency markets. With EUR benchmark rates at historic lows, and European bond investors communicating an ever-growing focus on sustainable assets, the time was ripe to bring our inaugural sustainability bond to the EUR market. The sheer scale and depth of demand allowed significant spread tightening through the execution process, delivering a pricing outcome which is very compelling versus other available markets.”

Standard Chartered Bank acted as sole sustainability structuring advisor and joint lead manager on the transaction. Other joint lead managers were ABN AMRO, Credit Agricole, Deutsche Bank and ING.