BME registers a new €1.25 bn sustainable bond issue by the Madrid regional government

27 February, 2020

  • AIAF is the benchmark market for this type of issues
  • It is the sixth issue of bonds linked to social or sustainability objectives by the Madrid region in this BME Market
  • With this operation there are already three ESG bonds registered with AIAF so far this year, following the issues by Bankinter and Adif

The Madrid Regional Government today registered a new 10-year sustainable bond issue with AIAF, BME’s Fixed Income market, for an amount of 1.25 billion euros. This is the sixth ESG bond issue registered with AIAF by this Public Administration since 2016. In this way the Madrid region becomes an issuer of reference in the field of sustainable finance, while AIAF leverages itself as the benchmark market for this type of issues.

The bond’s individual value is 1,000 euros and they have a 0.419% annual fixed interest rate. The final redemption date of the bonds is 30 April 2030. The objective of the issuance is to finance amortisations by the Administration and its associated bodies.

BBVA, HSBC, Bankia, Banco Sabadell, Deutsche Bank and Banco Santander have acted as Bookrunners. The Madrid regional government has a Baa1 rating, stable outlook, granted by Moody's; A-, stable outlook, by S&P, A-, stable, by Fitch and A low, stable, by DBRS.

This is the third ESG bond transaction registered by AIAF Market so far this year, following the recent issues by Bankinter and Adif, for 750 and 600 million euros, respectively.

Gonzalo Gómez Retuerto, General Manager of BME Renta Fija, highlighted the strong demand for these assets among national and international investors. "Sustainable, green and social bonds have become an asset class per se. The heavy demand received in the placement by the Madrid region as well as the interest rate level and the differential attained (Spanish Treasury Bond of reference plus 14 bp) are proof of this," he concludes.

The Madrid Regional Government is the first Spanish Public Administration to come to market in 2020, following the authorisation received from the Cabinet Meeting for the issuance of public debt.

It is also the first Spanish Public Administration that applied to issue in the bond market specifically to finance social projects, demonstrating its concern for non-strictly financial aspects such as climate change and social development.

The total volume issued by the Spanish regional governments in 2019 totaled 6 billion including commercial paper and bonds, placing the outstanding balance of these issuers at 35.2 billion euros.

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