Focus is on Benchmark Bonds in EUR and USD
Germany’s development agency for agribusiness and rural areas intends to raise up to 50% of its medium and long-term funding via benchmark bonds in euros and US dollars. These strategic issuances are to be complemented by additional liquid issuances and private placements in various currencies, especially in euros, US dollars, pound sterling and Australian dollars.
Green Bond Curve in EUR in the planning
In September 2020, Rentenbank successfully issued its first benchmark Green Bond in euros and more are due to follow in 2021.
“This market segment is currently extremely bullish. In 2021, we will be focusing on establishing a Green Bond curve in euros,” said Horst Reinhardt, Chairman of the Management Board at Rentenbank.
USD most important currency of issuance in 2020
In the current year, Rentenbank has raised around EUR 11.4 billion in the capital markets, including two USD global benchmarks with maturities of 5 and 10 years. The average maturity of the issuances increased to 7.3 years (7.1 years in 2019; hereinafter, figures in brackets refer to the respective prior-year period or date).
Rentenbank raised funding in seven different currencies. The share of USD-denominated issuances increased sharply to 47% (16%), while the share in euros and pound sterling decreased to 42% (59%) and 5% (17%) respectively.
USD also dominant in the Euro Commercial Paper Programme
Under its Euro Commercial Paper Programme (ECP programme), Rentenbank issued bonds with maturities of up to 364 days in six different currencies. With a share of 93%, the US dollar remained the programme’s most important currency of issuance. The average utilisation of the ECP programme was EUR 7.3 billion (EUR 5.8 billion).
Background information:
Landwirtschaftliche Rentenbank is Germany’s development agency for agribusiness and rural areas. Under its statutory promotional mandate, Rentenbank provides loans at favourable interest rates for agriculture-related investments via other banks on a competitively neutral basis. Rentenbank provides funding for banks, savings banks and local authorities operating in rural areas. The appropriation of profits is also subject to the promotional mandate. The bank is a public law institution whose capital stock was formed by contributions paid by the German agricultural and forestry sectors. It is subject to the German Banking Act (KWG) and is regulated by the Federal Financial Supervisory Authority (BaFin). The bank is one of the few triple-A rated institutions in Germany and raises funds primarily in the international capital markets.
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