Sustainable debt issuance

14 Sep 2021

Sustainable debt issuance with the lowest ever coupon

Today, Caixa Geral de Depósitos, S.A. performed a senior preferred debt issuance which represents the lowest coupon ever achieved by CGD in terms of issuances in the capital market.

Today, Caixa Geral de Depósitos, S.A. performed a a senior preferred debt issuance, amounting to 500 million euros, with a 6-year tenor, placed on international markets and issued with a 0.375% coupon, which represents the lowest coupon ever achieved by CGD in issuances in the capital market.

This issuance is particularly important due to its sustainability, channeling the capital raised toward the funding of credit operations of its clients within the scope of environmental and socioeconomic development. It is the first issuance with these features performed by a Portuguese bank and it is an important milestone in meeting the commitments taken on by CGD within the remit of sustainable finance, creating value for its clients and reducing the environmental impact of its activity.

To Mr. Paulo Moita de Macedo, CEO of Caixa Geral de Depósitos, “This issuance is evidence that we have the ability to innovate within the Portuguese Banking industry as pioneers, in the context of an economy whereby Sustainability is one of the fundamental pillars supporting the future”.

Purpose of the Issuance

This issuance is part of the funding plan for the fulfillment of the MREL (Minimum Requirements for own funds and Eligible Liabilities) set out by the Bank of Portugal, as decided by the Single Resolution Board. This issuance is the second to be placed in international debt markets with this purpose, following the senior non-preferred debt issuance performed in November 2019.

The materialization of this operation is also part of the process of authorization by European regulators for the exercise, by CGD, of the prepayment option of the Additional Tier 1 (AT1) issuance performed by CGD in March 2017 within the Funding and Capital Plan agreed between the Portuguese State and DG Comp.

Mr. Paulo Moita de Macedo further mentions “Obtaining the necessary authorization shall earn CGD an annual saving in interests in excess of 10%, considering the rate differential between the now issued debt and the AT1 coupon (10.75%), reflecting the effort invested since 2016 in reinforcing CGD’s solidity and competitive position.”

Placement

The issuance was placed exclusively for institutional investors, following the NetRoadshow that took place on 10 and 13 September, during which CGD held meetings with over 40 institutional investors. The issuance received close to 130 orders, totaling over 1.5 Bn euros, so the demand more than threefold surpassed the placed amount. In terms of the geographic distribution of the placement per investor, the following stand out: France (27%), Portugal (19%), Spain (14%), United Kingdom (12%) and Germany (10%). By type of investor, investment funds stand out, which have represented over 70% of the total issuance. The issuance’s Sustainable feature captivated several new investors.

First Sustainable Issuance by a Portuguese bank

This is one more step for CGD toward the promotion of Sustainable Finance in Portugal, thus contributing to the implementation of its Sustainability Strategy for the 2021-2024 period, underpinned by five strategic lines of action:

Sustainable and Inclusive Financing – Being a sustainable finance leader in the Portuguese market, supporting the transition toward a low-carbon economy and funding projects with a social impact on people’s lives.
Climate risk management – Accelerating the transition to a low-carbon economy through the efficient management of climate risk.
Equality, Digital and Financial Inclusion – Being an inclusive Bank which prioritizes the well-being of its employees and society in general.
Transparent Governance Models – Adopting efficient governance models that push forward performance in a responsible, diversified and transparent way.
Disclosure of Sustainability Information – Performing regular and transparent disclosures on ESG performance according to the best reporting practices and the applicable regulation.

This issuance will address eight of the UN’s Sustainable Development Goals, from energy efficiency to job creation in less-favored areas.

This operation pertains to CGD’s Sustainable Finance Framework, available here, with further information here (Portuguese only).

Further information concerning CGD’s policy and practices in terms of Sustainability can be found in its Sustainability Report, part of the Bank’s Annual Report, and is available here.

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