By Axel  Reiserer

Acting as an anchor investor, the European Bank for Reconstruction and Development (EBRD) has supported the issuance of a €100 million(US$115.9million) green bond by Latvia’s state-owned transmission system operator, AST. The EBRD’s participation resulted in an investment of €14.2 million.

The issuance attracted strong interest from Baltic and Nordic investors; bids worth €200 million reflected investors’ trust in AST’s sustainable business model. The EBRD’s participation in the company’s green bond issuance contributed to its success.

The green bond will be listed on the Nasdaq Riga exchange, a European Union (EU)-regulated platform and part of the Sustainable Stock Exchanges Initiative, which aims to enhance corporate transparency on environmental, social and corporate governance (ESG) issues.

EBRD Director, Head of Energy Europe, Grzegorz Zielinski said: “We are very proud of AST’s successful green bond issuance and pleased that we were able to make a contribution. This is very much in line with our activities to support the vital green transition. Concluding this transaction shortly before the start of the COP26 conference sends a strong signal that capital markets are prepared to support sound sustainable projects.”

Chairperson of the Board of AST, Gunta Jekabsone said: “Successful capital market transaction is great news for AST. The EBRD investment alongside other investors will enable the company not only to refinance historical investments but is also setting the foundation for our future development.”

With the transaction, AST becomes the first Baltic transmission system operator to issue a green bond. It is also the first time the company has approached the capital market to raise funds. The successful placement will allow AST to diversify its funding base and use green funding sources to facilitate its transition to a low-carbon-emission power system. The issue will also contribute to the deepening of the Baltic capital market.

The €100 million issue is the first tranche of a €160 million green bond programme to refinance existing loans associated with the unbundling of transmission system operators in Latvia in line with EU regulations. AST also aims to raise funds to finance future investments that enable the large-scale integration of renewables into the Latvian power system and synchronise the Baltic electricity network with that of western Europe.

In preparation for the issue, AST established a green bond framework in line with the International Capital Markets Association Green Bond Principles. The framework was reviewed by Standard & Poor’s Financial Services LLC to confirm that it corresponded to a long-term vision of a low-carbon and climate-resilient future.

Energy security and efficiency are among the EBRD’s top priorities in Latvia. To date, the Bank has invested more than €827 million in all sectors of the Latvian economy, supporting more than 95 projects.