Next-Finance : Why CNP Assurances has issued a Green Bond? What will the money raised be used for?
Jean-Philippe Médecin : In line with its commitment to energy and environmental transition (TEE), CNP Assurances has issued a Green Bond to finance green investments in the following three areas:
- buildings with high energy performance,
- forests managed sustainably,
- green infrastructures such as renewable energy projects and transport and mobility modes with low CO2 emissions.
Thus, CNP Assurances is stepping up its fight against global warming by showing its willingness to double its outstanding green investments in order to reach 20 billion euros by the end of 2023 against 10.4 billion euros at the end of last year.
Is it difficult to launch a Green Bond (compared to a conventional issuance)? What are its operational constraints for your teams?
Issuing a Green Bond is a heavy process, both upstream and downstream of this operation. Indeed, it is necessary to first establish a documentation called a green framework that explains the use of money raised from investors. But that’s not all: once the issue is completed, CNP Assurances will publish an annual report on the use of the funds raised and, depending on the data available, the environmental impacts of the projects financed (CO2 emissions avoided, energy saved).
What are the characteristics of this Green Bond? Is there a pickup in terms of return for clients, or rather a narrower spread compared to a conventional bond?
This is a subordinated Green Bond debt with a maturity of 30 years (July 2050) for 750 million euros, with prepayment options from the tenth year. It constitutes Tier 2 regulatory capital in accordance with the Solvency 2 regulations. The coupon is set at 2%, which represents the lowest coupon obtained by CNP Assurances on Tier 2 capital. The pick-up compared to a conventional subordinated debt is not significant.
What types of investors have subscribed to this issuance? Have you raised as much money as you want?
The bond issue was a great success and was largely oversubscribed with orders worth around 2 billion euros. Regarding our investors, they are mainly European investors based in France (43%) and in the United Kingdom (18%), most of them (65%) being asset management companies which offer green funds to their clients, even if insurance companies (27%) also participated in this transaction.
Will other Green Bonds emissions be expected in the near future?
Not for the moment because we are only committed to green investment amounts that we are certain to achieve. On the other hand, as soon as we realize new ones, it is not excluded that we issue new green subordinated debt.
What percentage will represent the refinancing via Green Bonds compared to the annual global refinancing for CNP Assurances?
As I said earlier, refinancing via Green Bonds will not be the standard issue format for CNP Assurances. And this issue represents only a part of the 2.8 billion euros we have to refinance in the next 3 years.
Is there a specific medium-term policy of CNP Assurances about the Energy Transition?
Yes, CNP Assurances has great ambitions to promote the transition to a low-carbon economy. In fact, the group recently announced new goals in the fight against global warming. As mentioned, in addition to the doubling of its outstanding green investments, CNP Assurances has accelerated its disengagement of thermal coal by, for example, lowering the exclusion thresholds for its existing investments, ie by divesting in companies whose 20% of their turnover is related to thermal coal instead of 25% previously and also by excluding from its new investments the companies whose more than 10% of their revenues is related to the thermal coal.
