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By Robert Hogg
Dec 12 (IFR) - The Republic of Poland has started marketing
the first Green bond issue from a sovereign, setting a new
milestone for the asset-class that has been growing steadily
over recent years.
The move to make market history comes despite the
coal-dependent nation dragging its feet over the Paris climate
agreement, which was ratified by the European Union in October,
and aims to slash greenhouse gas emissions by shifting away from
The country, which relied on coal for 92% of its energy
generation in 2011 according to IEA data, is marketing its
credentials as a leader in Green bonds.
Poland has started marketing the five-year euro benchmark
Green bond at 60bp area over mid-swaps.
"It seems to me that fair value is around 35bp over
mid-swaps," said a banker away from the deal. "Therefore it
looks like a new issue premium around 25bp which is high."
"In the Green bond space, bank and agency issuers have been
paying new issue premiums between 0-5bp. As the first sovereign
to test the market, I think Poland could end up paying a new
issue premium around 10bp."
The net proceeds of the issue will be used as per Poland's
Green bond framework, in line with the 2016 ICMA Green bond
principles. Sustainalytics have provided a second party opinion.
The Reg S trade is expected to price on Monday. HSBC is
Green structuring adviser, as well as a bookrunner along with JP
Morgan and PKO Bank Polski.
Poland is rated A2/BBB+/A- (negative/stable/stable).
(Reporting by Robert Hogg, editing by Helene Durand)