Barclays has launched a green structured notes programme to offer institutional and retail investors a ‘differentiated green investment opportunity’.
The payoff of the structured notes issued under the programme will be based on a green index. The proceeds of the notes will be allocated to the financing or re-financing of eligible green activities such as renewable energy, energy efficiency and sustainable transportation loans and contribute to the bank’s net zero goals as well as providing £100bn of green financing by 2030.
C.S. Venkatakrishnan (pictured), head of global markets at Barclays, said the green structured notes programme will provide clients with a new opportunity to access the green market while enabling the bank to offer a ‘more compelling and sustainable structured products offerings’.
Both the investment and the use of proceeds will be in line with the Sustainable Finance Framework and Green Issuance Framework, and the index is selected in line with the Green Index Selection Principles.
The portfolio of green projects the proceeds will fund will be originated by Barclays Bank, and will be verified by a third-party verification agent. The programme is now open for trading.
“We have been working on a programme like this for a while as the increasing client demand is evident," Arnaud Heckenroth (right), managing director, head of equities structuring Emea, told SRP. "It is also clear that there is an urgency for more sustainable investment opportunities to be made available, for both retail and institutional investors, in order to accelerate the transition to a low carboy economy. This is another exciting step forward and we will continue to explore what more we could do on this front to innovative further and provide more options to our clients.”
Products
Today’s announcement follows the launch of the Barclays Solactive Climate Change Europe BTI index earlier this year. The bank licensed on an exclusive basis the Solactive Climate Change Europe BTI Index to be used as the underlying of new structured products.
The Solactive Climate Change Europe BTI Index was developed in partnership by Barclays and Solactive to meet the needs of investors looking to explore investment opportunities arising from the global move to a lower carbon economy. The smart beta index uses the right. Climate AVG Target Europe Index as the starting point to define the index universe - which tracks companies that are aligned with the Paris agreement.
No retail products are being offered to investors under the programme yet. However, in its September 2021 Investment Ideas update, the bank is offering the notes via senior unsecured private placements with a minimum of £5 to £50 equivalent in major currencies with maturities ranging between one and five years.
These include a supertracker note and a digital note linked to Solactive Climate Change Europe BTI PR Index. Both products can be purchased with a three- or five-year tenor in euros, US dollars and British pounds. Capital is at risk as the structures use a 100%-90% put spread.
Financing goals
Barclays announced last year its commitment to align all its financing with the goals of the Paris Agreement, on the way to achieving its ambition to be a net zero bank by 2050.
The structured products launched under the programme will be an ‘important part of delivering that commitment in order to help accelerate the global transition to a low carbon economy,’ said Sasha Wiggins, group head of public policy and corporate responsibility.
The new programme will also complement the bank’s existing green bond programme with green structured note capabilities, which ‘will expand the diversity of funding sources’ and ‘expand our green product offerings for clients, said Kathryn McLeland, group treasurer.
The bank has a key focus on the impact of its financing and will continue to grow its product offering and social and environmental financing activity across the bank.