Green OLO

Bonds

	Green OLO 86	Green OLO 96
Issuance date	February the 26th, 2018	September the 14th, 2022
Maturity date	April the 22nd, 2033	April the 22nd, 2039
Coupon	1.25%	2.75%
Initial size	EUR 4.50 billion	EUR 4.50 billion
Current outstanding (31/05/2023)	EUR 10.63 billion	EUR 5.36 billion
Strippable	Yes	Yes
Transaction summary	Green OLO 86 Term sheets	Green OLO 96 Term sheets

 

 

Framework

Until 2021, Green OLOs were issued under the 2018 framework.

• Framework 2018
• Second Party Opinion 2018
• Investor presentation

From 2022, all new Green OLO issuances followed the 2022 framework.

• Framework 2022
• Second Party Opinion 2022
• Investor presentation

The Kingdom of Belgium is committed to provide to investors two types of reporting:

1. For all issuance under this Framework, the FPS Finance and the Belgian Debt Agency will coordinate and publish a report on the management/allocation of the proceeds of the preceding year to Eligible Green Expenditures or their estimates that will be further refined throughout the year. The latter is particularly the case for tax credits that can only be known once household and corporate tax returns are processed. These Expenditures represent a limited part of total Eligible Green Expenditures.

   The first allocation reporting will be published in the year following the first issuance and then annually until full allocation.

   The allocated proceeds will be broken down by Green Sector (e.g. energy efficiency, clean transportation, renewable energy, circular economy, living resources and land use) and by type of expenditure (e.g. investment expenditure, tax expenditure, operational expenditure…)

   The allocation of the proceeds will be reviewed annually by an independent audit firm.

   Allocation Report 2021
   Allocation Report 2020
   Allocation Report 2019
   Allocation Report 2018
    

2. The Minister of the Environment will coordinate and publish a report assessing the environmental impact of Eligible Green Expenditures.

   For the purpose of this reporting, a task force – consisting of the DG Environment, FPS Finances, FPS Mobilité, FPS Economie / DG Energie, Régie des Bâtiments, Politique scientifiques and Coopération au développement, and any other relevant body – will provide input.

   The first impact report will be published in the year following the issuance, and as necessary thereafter following additional issuance/tap or subject to other relevant information becoming available.

   Impact Report 2019-2021
   Impact Report 2018
    

3. From 2023, the allocation and impact reports will be included in a single report, which will be published on an annual basis.

   Allocation and Impact Report 2023
   Impact Report Methodology 2023

   Allocation and Impact Report 2022 (+ Erratum)
   Impact Report Methodology 2022
    

4. Excel allocation and impact summary

Global Capital EMEA/SRI awards “EMEA Green/SRI Bond Deal of the Year” On Tuesday September 4th, 2018 the Kingdom of Belgium’s inaugural Green OLO was crowned the EMEA Green/SRI Bond Deal of the Year by Global Capital. The award was collected by Anne Leclercq, Director Treasury and Capital Markets at the Belgian Debt Agency, at the Global Capital SRI Conference held in Amsterdam. In February 2018, the Kingdom of Belgium launched its EUR 4.5bn 1.250% 15-year Green OLO transaction, being the second Euro-Zone Sovereign to target the Green Bond market, in order to enhance the development of Belgian Green finance and the commitment of the Kingdom towards climate change mitigation and environmental protection. The deal was extremely well received by the Green Investor community and will immediately add substantial size and liquidity to Green Bond Markets. The Belgian Debt Agency would like to thank the structurers BNP Paribas Fortis and Crédit Agricole CIB, the joint-lead and co-lead managers and all involved Belgian Federal Services and Public Institutions for their commitment towards a highly successful transaction. https://www.globalcapital.com/article/b19tcwdcbrq2ks/sri-award-winners-2018-revealed
Climate Bonds - Green bond awards “Largest single bond to a trillion market” “Largest new issuer to a trillion market” Climate Bonds Announces 2019 Green Bond Pioneer Award Winners Recognition for global leadership, best practice and innovation in green finance Emerging nations spur climate finance LONDON 05/03/2019: Global leadership in green bond issuance and green finance development has again been recognised by Climate Bonds at the 4th Annual Green Bond Pioneer Awards (GBPA), announced before an international audience in London on the eve of the 2019 Climate Bonds Annual Conference. On this occasion Belgium received 2 awards for its inaugural green bond issued on February 2018. The GBPA are the premier annual recognition of achievement by organisations, financial institutions, governments and individuals who have demonstrated leadership through pioneering initiatives and green issuance, providing best practice examples of climate resilient and low carbon investments in a diverse range of nations and markets. On the occasion of the 4th ceremony, Alexander De Croo, Deputy Prime Minister - Minister of Finance & Development Cooperation, Kingdom of Belgium, declared that: "The issuance of a Belgian Green bond has been an excellent opportunity for the Kingdom to demonstrate its strong commitment towards addressing global environmental challenges and raise awareness and funds to support its climate and environmental policies. A topical subject, judging by the nowadays climate marches in Belgium and worldwide. Undoubtedly, this sizeable Green OLO has been a catalyst in further developing the Green Bond market globally and in particular in Belgium, where it paved the way for other public and private issuance and stimulated the growth of Green Belgian investor demand as witnessed by the arise of several Green Funds." Sean Kidney, CEO, Climate Bonds Initiative stated that “The 2019 Green Bond Pioneer Awards congratulate the organizations, institutions and governments who are taking the lead on mobilizing green finance, to create and attract climate investment whilst building market confidence.”   https://www.climatebonds.net/resources/press-releases/2019/03/cbi-2019-green-bond-pioneer-award-winners

1. What is a Green OLO? How does it work?

A Green OLO has the same characteristics as any other OLO, - with regard to initial size, reopening of the bond and secondary market liquidity - but for which the Kingdom of Belgium will take additional commitments on the use of proceeds and reporting. A framework has been created comprising different eligible green sectors for which the Federal Government is competent. This framework is in line with the Green Bond Principles, 2017, and The Kingdom of Belgium will use its best efforts to follow best practices as they evolve.

 

2. Do you plan to issue the Green OLO right after the roadshow? What kind of size are you targeting? And which maturity?

We are targeting a benchmark green OLO (hence EUR 3bn+) in the tenor of 15 years or above. The transaction will be launched, subject to market conditions.

 

3. Which redemption month are you targeting?

The redemption month will be different from that of other OLO’s in order to mark the difference between a Green OLO and the other OLO’s. The redemption date for this bond will be April 22^nd.

 

4. Is the Green OLO strippable?

The Green OLO will be strippable just like all other OLO’s.

 

5. Are you going to be a repeat issuer?

The Kingdom of Belgium will ensure the liquidity of this Green OLO through regular taps based on investors’ demand. No communication can be done as of today on the issuance of other Green OLOs.

 

The Green OLO and its Framework

 

6. What is the rationale for The Kingdom of Belgium to issue such a Green Bond?

Green Bonds markets are widely thought to have the long term potential to attract more investments for environmental challenges, and to mitigate and adapt to climate change in particular. With this transaction, the Kingdom of Belgium has the ambition to:

• Foster and secure public investments and the financing of public policies required at the federal level to address the low carbon transition, biodiversity and other environmental challenges, in order to fulfil our objectives and comply with our commitments in these domains;
• Foster economic activity and jobs through investments in strategic, green sectors
• Further the development of this market, so that it reaches the critical size that will be necessary to start influencing green investments globally;
• Contribute to the adoption of best practices;
• Additionally, the Kingdom of Belgium is constantly seeking to diversify its funding sources and investor base.

 

7. What are the intended types of expenditures to finance with the Green OLO?

All Green Eligible Expenditures will be related to the Federal State environmental objectives and competences.

Green Eligible Expenditures are Federal State expenditures that can qualify under the Green OLO Framework, including tax incentives, investment expenditures and operating expenditures, as any of such expenditures can be used to deploy Belgium’s climate and environmental policies.

Expenditures can be directed at state agencies, regions and communities, companies and households. Nevertheless, Green Eligible Expenditures will exclude any Federal State expenditure to a Belgian agency or to a local authority that such entity plans to use itself for its own Green Bonds, as the Federal State wants to protect the Green Bond issuance capacity of other Belgian public players.

Green Eligible Expenditures include recent and current expenditures within the Federal State’s budget and expenditures towards Green Holdings within the Federal State Portfolio (“FPIM/SFPI” plans) that fall within the following Green Sectors:

 

Green Sector	Scope for the Green Eligible Expenditures and examples
Energy Efficiency	Invest in green buildings and improve buildings energy efficiency (i.e. roof / wall / floor insulation, new boiler, new heat pump, solar heater) Improve energy efficiency of private sector production facilities Promote demand-side management (DSM) measures Examples of Green Eligible Expenditures: Tax credit for corporates investing in energy efficiency Investments in Sustainable Real Estate Funds with Green certification
Clean Transportation	Promote transport services and modal shift towards public transportation and soft mobility; support multimodal transport solutions Support the development of electric vehicles and related infrastructures Examples of Green Eligible Expenditures: Federal State’s support for investment and operating expenditures related to the extension, improvement and maintenance of public transports and rail-related infrastructures Tax credits in favor of electric vehicles
Renewable Energy	Develop and support/deploy renewable energies technologies and related investments (e.g. wind off-shore, solar, hydropower (< 25MW), including supply and storage infrastructures) Examples of Green Eligible Expenditures: Federal State’s support to renewable energy infrastructures
Circular Economy	Promote sustainable consumption and production modes (including waste reduction and recycling) Examples of Green Eligible Expenditures: Tax expenditures for reusable packaging
Living Resources and Land Use	Improve the resilience of territories to climate change and other natural disasters, including in developing countries Preserve the biodiversity and enhance environment protection (including pollution prevention and control) Develop pollution monitoring and control systems Mitigate non-CO2 emissions in agriculture Examples of Green Eligible Expenditures:   Operating expenditures of academic research programs in biodiversity, climate change and other global environmental challenges Investment expenditures for soil rehabilitation Investment in Sustainable programs for climate change mitigation and adaptation in developing countries

The Inter-Ministerial Working Group aims at excluding all nuclear activities, all armament and any expenditure mainly related to fossil fuel.

 

8. What type of information will the reporting include?

The Kingdom of Belgium is committed to provide to investors two types of reporting:

• For all issuance under this framework, the Ministry of Finance and the Belgian Debt Agency will coordinate and publish a reporting on the management/allocation of the proceeds of the preceding year to Eligible Green Expenditures or their estimates that will be further refined throughout the year. The latter is particularly the case for tax credits that can only be known once household and corporate tax returns are processed. These Expenditures represent a limited part of total Eligible Expenditures.
  The first allocation reporting will be published in the year following the first issuance and then annually until full allocation.
  The allocated proceeds will be broken down by Green Sector (e.g. energy efficiency, clean transportation, renewable energy, circular economy, living resources and land use) and by type of expenditure (e.g. investment expenditure, tax expenditure, operational expenditure…)
  The allocation of the proceeds will be reviewed annually by an independent audit firm.
• The Minister of the Environment will coordinate and publish a reporting on an assessment of environmental impact of Eligible Green Expenditures.
  For the purpose of this reporting, a task force – consisting of the DG Environment, FPS Finances, FPS Mobility, FPS Economy / DG Energy, Belgian Buildings Agency, Science Policy and Development Cooperation, and any other relevant body – will provide input.
  The first impact reporting will be published in the year following the issuance, and as necessary thereafter, at an appropriate frequency, depending on Green Sectors, until the maturity of the Green OLO.

 

9. Has this Framework been reviewed by a Second Opinion Provider?

It is The Kingdom of Belgium’s strong intention to follow best market practice, so as recommended by the Green Bond Principles, an external reviewer (Sustainalytics) has confirmed the alignment of the Green OLO Framework with the four pillars of the Green Bond Principles.