First sovereign joins Luxembourg Green Exchange
The world’s first sovereign green bond, issued by the Republic of Poland, lists at the Luxembourg Stock Exchange (LuxSE). The EUR 750 million green bond will, in parallel, be displayed on the Luxembourg Green Exchange (LGX).
“Poland is one of the leading sovereign issuers listed on our exchange. We are delighted that we were chosen as the listing venue for the country’s first green bond; it is at the same time the first sovereign green bond issued in international capital markets,” comments Robert Scharfe, CEO of LuxSE.
Asked about the selection criteria when choosing the listing venue for the green bond, Poland’s Deputy Minister of Finance, Piotr Nowak, explained: “LuxSE is one of the biggest stock exchanges for international bonds in Europe, and a very innovative one. The recent implementation of the Green Exchange is a proof of an open-minded approach towards the needs of financial markets. On top of that, we received strong recommendations from market participants to list there”. Poland lists EUR 50 billion worth of bonds in Luxembourg. The green bond is listed on the EU-regulated market and its maturity date is 20 December 2021. The proceeds, as stated in the framework and prospectus, will be used for renewable energy, clean transportation, sustainable agriculture operations, afforestation, national parks and reclamation of heaps.
The LuxSE Green Team puts special focus on assessing the planned use of proceeds raised from green securities. The Polish sovereign has committed, among other things, to deliver a detailed ex-post report on the actual use of proceeds raised through this issuance. The first report is expected a year after the initial listing and will need to be presented on a yearly basis throughout the lifetime of the security. Its aim is to ensure the public that the raised funds are being allocated as stated in the framework and prospectus.
The right direction
“Poland is taking active steps to move towards more sustainable energy sources and clean technologies. The planned use of proceeds raised through the green bond issuance was assessed in an external review report by Sustainalytics as ‘robust, credible, and transparent’. This is of particular importance as transparency is paramount to investors. For this reason, our admittance process requires issuers to get an independently verified report on the intended use and management of proceeds,” comments Julie Becker, member of the LuxSE Executive Committee, supervising LGX.
Other sovereigns have already publicly indicated that they will join the green bond issuance trend, already well advanced among corporate issuers and development banks. “We are happy to welcome the first ever sovereign on LGX. I hope many others will soon follow Poland’s lead,” adds Julie Becker.
The green finance platform
The LGX platform, launched in September 2016, gathers issuers that dedicate 100% of the raised funding to green investments. It requires green securities to adhere to strict eligibility criteria, including:
- Declaring the security green, based on the ICMA GBP or CBI taxonomy, or equivalent. During the application process the issuer has to clearly state the intended green nature of the security.
- Use of proceeds. Clear disclosure that the proceeds are exclusively used for financing or refinancing projects that are 100% green, according to the GBP or CBI eligibility taxonomy.
- Ex-ante review and ex-post reporting. Issuer’s commitment to provide both independent external review and ex-post reporting.
About the Luxembourg Stock Exchange (LuxSE)
2 markets, 3,000 issuers, 40,000 securities
The Luxembourg Stock Exchange (LuxSE) is the gateway to access international investors. With 40,000 listed securities, including some 26,000 bonds, from 3,000 issuers in 100 countries, LuxSE is the world’s number one exchange for the listing of international securities and offers a unique full service throughout listing, trading and reporting.
LuxSE operates two markets: an EU regulated market (“Bourse de Luxembourg”) and an exchange-regulated market (“Euro MTF”). All securities are tradable on Euronext’s UTP platform.
LuxSE also operates a specialist subsidiary, Fundsquare, which provides services to substantially support and standardize cross-border distribution of investment funds.
 External review prior to listing is accepted in one or more of the following forms: second opinion, certification, verification, rating report. It is used, amongst others, to assess the use of proceeds, the selection/assessment process, as well as the management of proceeds.
 Ex-post reporting will be requested on a qualitative and/or quantitative basis as from the 12th month after listing of a green bond. Suggested frequency for ex-post reporting is once per year.
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