The placement was three times oversubscribed, allowing the issue’s spread to be reduced to 12 basis points over the 10-year Treasury bond
This is the ninth issue linked to social or sustainable objectives by the Madrid regional government in this BME market.
BME’s AIAF Fixed Income market today admitted a 1 billion euro sustainable bond to trading from the Madrid regional government, with a 0.42% annual coupon and maturity on 30 April 2031. During the placement process the volume placed exceeded 3.5 billion euros, which allowed the issuer to reduce the spread against the Treasury’s same term benchmark Obligation. The bonds have an individual value of 1,000 euros and 75% were placed with international investors. The issue follows the authorisation given to the Madrid regional government by the Government Cabinet Meeting held on 9 February, to formalise long-term loans and issue Public Debt up to a maximum amount of 3 billion euros.
BBVA, Banco Santander, Banco Sabadell, HSBC, Caixabank and JP Morgan have participated as Placement Entities in this new issue.
This transaction, which is in addition to the 1.25 billion euro sustainable bond issued in February 2020 & the health bond issued in May last year to deal with the Covid-19 pandemic, is part of the Sustainable Financing Framework of the Madrid Region, whereby the funds raised will be used to finance environmental and social projects.
The Madrid regional government is rated Baa1, stable outlook, by Moody's, A-, positive outlook, by S&P, and A-, stable, by DBRS.
It is the ninth Environmental, Social and Governance (ESG) issue registered by the Madrid region with the AIAF market since 2016.
Gonzalo Gómez Retuerto, General Manager of BME Renta Fija, highlighted that "the significant oversubscription has allowed the Madrid region to raise financing at very attractive levels and demonstrates the market's clear interest in these assets".
The Madrid region’s bond adds to other transactions worth mentioning, such as those carried out by the Basque Government, the Region of Navarra and the Regional Government of Galicia, as well as Barcelona City Council, thus leveraging BME's position in green, social and sustainable bonds.