Paris-area public transport authority Île-de-France Mobilités has successfully raised €1 billion through a groundbreaking green bond offering, marking the first such issuance by a public entity under the European Green Bond (EuGB) Regulation. This initiative reflects the increasing adoption of the newly established EuGB label, which had its corporate debut earlier this year with a €500 million issuance by Italian utility company A2A.
Introduced by the EU in November 2023 and set to take effect in December 2024, the EuGB regulation aims to create a robust framework for green bonds, thus addressing concerns about greenwashing and enhancing the sustainable finance landscape within the bloc. All proceeds from bonds issued under this standard are mandated to be allocated to projects aligned with the EU Taxonomy, allowing for a 15% allocation in sectors lacking established criteria under the taxonomy, provided that issuers transparently outline their plans for these funds.
Île-de-France Mobilités plans to utilize the new capital for a range of sustainable projects targeting climate and environmental objectives, particularly focusing on clean public transportation. The authority aims to build an extensive low-carbon public transport network to help reduce greenhouse gas emissions from transport in the region by 25-30% by 2030. Anticipated investments include upgrading infrastructure, expanding electric rolling stock for various types of transit, and deploying low-emission buses and electric bicycles.
The offering witnessed significant demand, resulting in the largest spread tightening and one of the most substantial order books in the authority’s history. Valérie Pécresse, President of the Île-de-France region and Chair of Île-de-France Mobilités, emphasized the transport system’s critical role in combating climate change, highlighting the achievement of being the first public issuer globally to launch a €1 billion Green Bond under the EuGB standard.
Investment banks BNP Paribas and Crédit Agricole CIB served as green co-structuring advisors for the bond issuance. Frederic Zorzi, Global Head of Primary Market at BNP Paribas, stated that this transaction marks a significant advancement for the green bond market, reinforcing the importance of transparency and setting a precedent for sustainable financing practices.