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BPCE issues €100 million of transition bonds, invested by AXA IM

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BPCE issued in December its first EUR 100 million Transition Bond 100% subscribed by AXA Investment Managers (AXA IM), refinancing Natixis’ assets contributing to the energy transition.

The bonds have a 10-year maturity and will pay a coupon of 0.55%. They will be listed on the Paris Stock Exchange.

Issued by BPCE, the proceeds of the transition bonds can be used to refinance Natixis’ assets, consisting of project and/or corporate loans from relevant sectors such as, potentially, transport, power, midstream gas, mining and metals,  as well as building materials. The assets will be selected for their high emissions reduction potential and their contribution to a low-carbon economy.

The transition bonds have two key innovative features. The selected portfolio includes:

  • “Sustainability-linked” corporate loans integrating a credit margin adjustment linked to the achievement of key performance indicators (KPIs) related to the climate and the energy transition. This loan format is well suited to capture the holistic, dynamic and forward-looking dimensions of the corporate energy transition.
  • Project loans selected based on Natixis’ in-house Green Weighting Factor methodology, an innovative mechanism that links Natixis’ analytical capital allocation to the degree of climate and environmental performance of each financing, enabling it to actively manage and steer its balance sheet’s climate impact and transition strategy.

The proceeds of this transaction will be used to refinance energy transition assets such as:

  • Project loans dedicated to metals (bauxite and copper), which are considered as enablers for low-carbon technologies (e.g. Electric Vehicles, Energy Storage, Power Generation, Clean Transportation. 57% of aluminium and 43% of copper produced are considered to be used in low carbon applications, considering an average 2017-2040 of low carbon use in a 2° C scenario).
  • Project loans that are dedicated to electricity transmission and distribution assets, contributing to the interconnection of countries with low-carbon-based electricity generation;
  • A “sustainability-linked” loan to one of the leading global aluminium producers, supporting the company’s commitment to low carbon aluminum production and actual sale.

Following AXA IM’s call to action last year, this transaction demonstrates its intention to play a leading role in the development of transition bonds. AXA IM and Natixis also co-chair the ICMA Climate Transition Finance Working Group, which aims to steer capital market participant debate and disclosure guidance when raising funds for climate transition-related purposes.