Emphasis on benchmark bonds in euros and US dollars
The German development agency for agribusiness and rural areas intends to raise up to 50% of its medium-term and long-term funding volume by issuing benchmark bonds denominated in euros and US dollars. This includes a Euro-denominated transaction under the ICMA Green Bond Framework. The strategic issues will be supplemented by other liquid issues and private placements in various currencies.
Expansion of the Green Bond Framework
Rentenbank revised its framework for the issuance of green bonds in May 2023 so that it can now use green bonds to fund investments not only in wind and solar, but also in biogas projects. ”The addition of biogas plants to the framework has increased our potential for additional green bonds and expanded our investor base appreciably”, said Rentenbank Chairwoman Nikola Steinbock.
Euro was the most important issue currency in 2023
Rentenbank has raised approximately EUR 10.5 billion in the capital markets so far in the current year, including a Rentenbank euro benchmark bond with a volume of EUR 1.5 billion and a term of 7.5 years. Rentenbank also issued a 10-year euro benchmark bond as a green bond with a volume of EUR 1.0 billion. It also issued a US dollar benchmark bond with a volume of US$ 1.25 and a five-year term and a benchmark bond with a volume of US$ 1.0 billion and a ten-year term. The average term of the bank’s issues rose to 8.4 years (2022: 7.0 years).
Rentenbank raised funds in three currencies in 2023 (2022: seven currencies). The percentage of euro issues was 66%, slightly higher than in the previous year (2022: 65%). By contrast, the percentage of US dollar issues was substantially higher, at 27% (2022: 19%) and the percentage of issues denominated in Australian dollars was likewise higher, at 7% (2022: 4%).
Euro was the dominant currency in the ECP Programme
Under its Euro Commercial Paper Programme (ECP Programme), Rentenbank issued bonds with terms of up to 364 days in seven different currencies. The most important issue currency in the ECP Programme was the euro, which accounted for 52% of the total issue volume. The average utilisation of the ECP Programme was EUR 10.2 billion (2022: EUR 13.2 billion).
About Rentenbank:
Landwirtschaftliche Rentenbank is Germany’s development agency for agribusiness and rural areas. Its promotional mandate covers not only agriculture and forestry, but also the entire food value chain, the increased use of energy from renewable sources, and the promotion of bio-economy solutions. Rentenbank attaches particular importance to the promotion of innovation, including research and development in universities, the early-stage financing of agriculture-related start-ups, and the market introduction and practical use of new technologies and products. Rentenbank’s promotional instruments are subsidies and special promotional loans. The special promotional loans are granted via the local banks of the ultimate borrowers on a competitively neutral basis. Rentenbank provides funding to banks, savings banks, and local authorities operating in rural areas. The Bank is a federal institution under public law whose capital stock was formed by contributions from the German agriculture and forestry sectors. It is subject to the German Banking Act (KWG) and is regulated by the Federal Financial Supervisory Authority (BaFin) and the Bundesbank. Rentenbank raises funds in the capital markets as one of the few triple-A rated institutions in Germany.
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