City of Moscow placed first green bond issue in full
The City of Moscow placed the first issue of green bonds on Moscow Exchange. The volume of the 74th internal bond issue (RU26074MOS0) was RUB 70 billion. According to the issuer, demand exceeded the offer by 23%: 721 bids worth RUB 86.3 billion were received. The coupon rate was set at 7.38% per annum.
Moscow Exchange has included the 74th City of Moscow bond issue in the Level 1 List and the Sustainability Sector. According to an opinion provided by Expert RA rating agency, the bond issue complies with the Green Bond Principles (GBP) of the International Capital Market Association (ICMA). It also meets the Guidelines for the Promotion of Green Investments in the Russian Federation developed by VEB.RF.
Elena Zyabbarova, Minister of the Government of Moscow and Head of the Department of Finance, said:
"The results of the City of Moscow’s green bond offering are in line with our expectations and calculations. Investors have demonstrated their interest in financing environmental projects in the city and confirmed the high potential for the development of responsible financing in Russia. Moscow is leading the way in this process by investing proceeds from this offering in environmental improvements, continuing the development of the metro lines, and replacing diesel buses with electric buses. The successful placement of the 74th bond issue worth RUB 70 billion not only led to a more than three-fold increase in the volume of securities traded in MOEX’s Sustainability Sector, but also took the green bond market structure to a new level of quality."
The proceeds from the bond placement will be used for urban transport infrastructure projects that reduce air pollution caused by automobiles. The Analytical Credit Rating Agency (ACRA) assigned a credit rating of AAA(RU) to the 74th issue of City of Moscow bonds.
On 21 May, a new version of the Moscow Exchange Listing Rules came into force, allowing sub-federal and municipal bonds to be included in the Sustainability Sector. MOEX’s Sustainability Sector was launched in 2019 to facilitate financing of environmental and social sustainability projects.
On 27 April 2021, the City of Moscow successfully placed its 72nd bond issue for RUB 35 bln on Moscow Exchange. The total volume of bids submitted exceeded the offer 2.3 times.