The Federal Republic of Germany’s “twin-bond” concept – supported by Commerzbank – wins Environmental Finance’s Green Bond of the Year (Sovereign) Award 2021

In recognition of the significance of the Federal Republic of Germany’s 6.5 billion euros syndication under its innovative “twin-bond” concept, Environmental Finance has named the transaction the winner of its Green Bond (Sovereign) Award 2021. Judged by an independent panel of investors, the Environmental Finance Bond Awards are highly regarded in the sector, and recognise the market’s leading green, social and sustainability bond deals.

The winning transaction – co-lead managed by Commerzbank – was brought to market in September 2020 and showcased an innovative twin-bond concept, a new and unique method of mirroring the terms of a conventional “bond”. The successful issuance and pioneering structure meant that, for the very first time, it was possible to observe the exact price of the “green premium” (“greenium”) in the primary market.

The ground-breaking approach provided full price transparency and allowed for an outperformance of the green twin. From the outset, the transaction had great momentum, and orderbooks closed in excess of 33 billion euros, representing one of the largest ever for a German syndication. Indeed, the twin bond reached the highest investor demand, both in absolute and relative terms, compared with its closest European sovereign peers, France and the Netherlands.

The transaction will allow the Federal Government to establish a full green bond benchmark curve as a reference for the European market, mirroring common maturities of its conventional curve: two, five, ten and thirty years. As this was the first time that a green benchmark bond had been issued with a structure that would make the “greenium” measurable, the transaction represented a significant contribution to the development of the sustainable bond market.

Sylvia Moussalli, Head of Bank and Public Sector Bond Origination at Commerzbank, said, “The Federal Republic of Germany’s innovative twin-bond concept represents a breakthrough in benchmarking capabilities for green bonds all over Europe. We, at Commerzbank, are delighted to have been part of this ground-breaking initiative, and give our whole-hearted congratulations to the Federal Republic of Germany and all the teams involved in this fantastic achievement.”