Markets

JPMorgan debuts in green bond market with $1-billion deal

Bloomberg September 10 | Updated on September 10, 2020

Proceeds will be used to fund eligible sustainable projects, which may include green buildings and renewable energy

JPMorgan Chase & Co, the biggest US bank by assets, is issuing bonds to finance environmentally-friendly projects for the first time.

The New York-based lender is selling $1 billion in green bonds maturing in four years, according to a person with knowledge of the matter. The offering may yield 0.65 percentage points above Treasuries, said the person, who asked not to be identified as the details are private. JPMorgan is the sole manager of the bond sale, the person said.

Proceeds will be used to fund eligible sustainable projects, which may include green buildings and renewable energy, according to Sustainalytics second-party opinion. The bank halted advising or lending to companies that get most of their revenue from extracting coal earlier this year and said it was planning to exit existing credit exposure to those companies by 2024 as part of its sustainability commitments.

Joining the green bandwagon

JPMorgan joins other top Wall Street banks that have sold debt to finance green or social projects. In May, Citigroup Inc raised $1.5 billion with a dollar-denominated green bond for the first time, while Bank of America priced a $1-billion issue to fund Covid-19 relief efforts, the first sale from a US financial institution that explicitly links all proceeds to tackling the virus.

“JPMorgan is clearly being opportunistic given the growing demand in the green bond market, but if they’re committed to investing in legitimate green and social causes as they seem to be here, then we don’t mind them being opportunistic,” said James Rich, senior portfolio manager of sustainable fixed income at Aegon Asset Management, which had about $408 billion in global assets as of June 30. “It’s a win-win for them and the environment and society.”

Companies and governments have raised to date a record $140.4 billion globally in green bonds this year, compared to about $129.4 billion in the same period last year, according to data compiled by Bloomberg. The financial sector has sold $43.2 billion in green notes this year, making it the largest issuer after governments.

Published on September 10, 2020

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