Banco BPM launches Italy's first green Tier 2 bond with EUR 500 million deal

Banco BPM has priced what it described as Italy's first green Tier 2 subordinated bond, raising EUR 500 million from institutional investors in an 11.5-year non-call 6.5 structure, maturing in January 2038 and callable in January 2033.

The subordinated notes were issued under Banco BPM's Green, Social and Sustainability Bond Framework, with proceeds to be allocated to the financing and refinancing of Eligible Green Loans as defined in the framework, the bank said in its announcement. The deal is targeted only at institutional investors.

FIRST GREEN TIER 2 FROM ITALY

If the notes are not called in January 2033, the coupon will be reset at the five-year euro mid-swap rate plus 143 basis points, which the bank said is the lowest credit spread ever for a Banco BPM Tier 2.

Fund managers took 85% of the bonds, and international investors predominated, led by France (27%) and the UK and Ireland (26%), with Italian investors at 17%; about 75% of allocated orders came from investors with ESG commitments, the bank said.

Banca Akros, Citi, Crédit Agricole CIB, Goldman Sachs International, HSBC, Natixis, Santander and Société Générale acted as joint bookrunners.

CAPITAL AND SUSTAINABILITY OBJECTIVES

For Banco BPM, the EUR 500 million deal supports its Tier 2 capital base while financing or refinancing Eligible Green Loans as defined in its Green, Social and Sustainability Bond Framework.

The framework, published on 7 November 2023, is described by the bank as a key pillar of its ESG strategy.

The bank said the issue brings its total ESG issuance to EUR 8.5 billion; the notes were issued at a price of 99.59 with a 4.125% annual coupon until the January 2033 call date.