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BME Admits BBVA’s 1-Billion Euro Green CoCo Bond To Trading

Date 20/07/2020

  • It is the first green CoCo ever issued by a financial institution worldwide
  • So far this year, eight bond issues with sustainable criteria have been registered with BME

BME has admitted a 1-billion euro green Contingent Convertible bond (CoCo) from BBVA to trading. This is the first bond of its kind ever issued by a financial institution worldwide. The instrument is perpetual, has a 6% yield and can be converted into equity if the bank's capital ratio falls below a certain level. The amortisation option date set by the issuer for investors is January 2026, thus allowing the issuer to cease coupon payments.

The issuing is allocated toward refinancing the possible early repayment in April 2021 of the AT1 issue (or Additional Tier 1 (AT1) as CoCo bonds are referred to in technical terms), which was launched in 2016. CoCos are hybrid instruments that have both debt (they pay interest to the buyer) and equity elements (they can absorb losses) and can be converted into shares if the highest quality capital ratio falls below a certain level.

The bond is rated Ba2 by Moody's and BB by Fitch. The Joint Bookrunners for the issue are BBVA, Barclays Bank, BNP Paribas, Citibank, JPMorgan and Société Générale and Bankia and Bankinter have acted as Co-Managers.

This issue is part of BBVA's commitment to mobilise 100 billion euros in sustainable finance until 2025.

Gonzalo Gómez Retuerto, general manager of BME Renta Fija, explains that this issue is further proof of the unstoppable growth of sustainable finance in its various formulas. "This type of issue will play a key role in the recovery from the Covid-19 crisis and in the transition towards a more sustainable and environmentally friendly economy. The markets are side by side with issuers in the development of innovative products".

So far this year eight sustainable bonds have been registered with BME, issued by Bankinter (750 million), Adif (600 million), the Navarra region (for a total amount of 75 million euros), and the Madrid region. Madrid placed its first green bond for 700 million euros in April, closed a sustainable bond transaction worth 1.25 billion euros in February and issued the first social health bond for a public administration in Spain in May, for 52 million.