BBVA issued the first ever Green Additional Tier 1 (AT1) bond on July 7, and immediately sparked a spirited debate among the TwentyFour team over how green bank capital can be.
The premise of the €1bn deal, which BBVA priced at 6% after attracting demand of €1.8bn, is to assist the Spanish bank in providing €100bn in sustainable financing by 2025. However, the documentation made clear that this new issue might be used to refinance another AT1 BBVA has outstanding, which for us caused some confusion. Would this bond be used as capital against lending for sustainable projects, or would it be used to buy back an existing AT1? BBVA does already have €2.9bn of eligible green assets in its portfolios, so technically it could do both. However, the key question from...
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