Treasury Management Internation Logo

Deutsche Bank Executes World’s First Green Hedge with Continuum

Published 

Deutsche Bank and Continuum Energy Levanter Pte Ltd, a subsidiary of Continuum Green Energy, today announced they have executed the world’s first green hedging transaction with a second party opinion based on a specially designed green hedge framework.

Deutsche Bank and Continuum worked together to develop a green hedge framework to support the implementation of Continuum’s green bond framework. External reviewer, Cicero Green, issued the Second Party Opinion on the green bond and the green hedge frameworks.

Deutsche Bank Head of Sustainable and Special Solutions Asia, Rahul Jain said: “This hedge structure has the potential to set new standards for increased transparency and risk management particularly for Emerging Markets hard currency green bond issuances.”

The FX hedge solution is for a 6 years tenor in US dollars/Indian Rupees on notional of US$185 million, linked to Continuum’s green bond US dollar primary issuance and based on their green bond framework.

“With new green debt issuance in Emerging Markets (EM) continuing to grow, investors are increasingly looking for ways to distinguish well managed, quality green issuers from the rest.  This solution sets a high water mark for disclosure and transparency for green bond investors. By adopting this green hedge framework, Continuum will increase transparency for investors by combining metrics and reporting of a project’s ESG impact as well as providing important reference points for financial risk management,” Jain added.

Bond proceeds are used for renewable energy projects in India, which exposes the company to US dollars / Indian Rupees FX risks. The green hedge framework provides a methodology for Continuum to risk manage their currency exposure while providing additional transparency for the green bond holders.

Deutsche Bank was the lead bookrunner and green structuring agent for Continuum’s 144A/RegS green bond which priced in February this year.

Continuum Green Energy Chief Executive Officer Arvind Bansal said: “This is a highly innovative and elegant financial risk management solution for our USD green bond where proceeds are invested in greenfield renewable energy projects in India.  Our underlying green project revenues are generated in Indian Rupee while the principal and interest are to be repaid is in US Dollar, giving rise to currency risks.  The green hedge manages the currency exposure, ensuring the underlying green projects are financially sustainable, while ensuring investors receive their returns on the green bond.”

Deutsche Bank’s Head of ESG for Asia Pacific, Kamran Khan said, “A key global priority today is to ensure that new investments in EM are increasingly ESG-compliant. This is because the bulk of new global investment in infrastructure, manufacturing and other industries is taking place in EM. Deutsche Bank is committed to developing new, innovative financial products and services which incentivise the shift towards sustainability. We are particularly pleased with the unique Deutsche Bank signature on this transaction evident in the inclusion of sustainability reporting and the sophisticated financial structuring of the hedging solution linking with a green hedge framework.”

Sustainability is a core pillar in Deutsche Bank’s transformation strategy and the bank is committed to supporting clients as they transition for the zero carbon economy.  Last year in Asia Pacific Deutsche Bank structured Asia’s first currency hedge linked to sustainability key performance indicators.  This hedge structure was assessed and approved against Deutsche Bank’s Sustainable Finance Framework.

Most recent episodes

Stepping Out from the Shadows

"Treasurers needs to step out of the shadows and into the sunshine in terms of their strategic contribution." claims Zitah McMillan, Co-Founder and CEO, Predictive Black.In this podcast, hosted by TMI's Eleanor Hill, our guest declares that the time has come...

16:54

Why the ‘One Size Fits All’ Approach is Outdated - A Cash Segmentation Treasury Masterclass

With the ongoing low interest-rate environment and increasing regulatory change, it’s more important than ever for treasurers...

23:55

Instant Payments: Instant Rewards

TMI’s Eleanor Hill sits down in the virtual TreasuryCast studio with J.P. Morgan’s Global Head of Real-Time Payments, Cyrus Bhathawalla, to discuss how treasurers can capitalise on the evolving nature of real-time payments.Our guest contemplates the...

23:55

Building a Data Driven Cash Forecast (with Minimum Effort)

TMI's Eleanor Hill is joined by Conor Deegan, CashAnalytics, and TMI Award winner François Masquelier to discuss how to make use of internal and external cash flow data sources to create reliable and accurate cash...

41:34

Tackling the Complexities of IBOR Transition

TMI's Ben Poole speaks to Shaun Kennedy (Associated British Ports), Tassos Dimopoulos (Salmon Software), and Svenja Schumacher (Deloitte), who provide listeners with everything they need to know about the upcoming...

32:27

KYC: How to Streamline Customer Reference Data in Treasury Processes

In this podcast, Cornelia Hesse (EACT/ VDT) speaks to Noëlle Belmimoun (ArcelotMittal/ AFTE), Patrick Holemans (SWIFT), Séverine Le Blévennec (Aliaxis), Tarek Tranberg...

43:05

Becoming a Real-Time Treasury Champion

HSBC experts Thomas Halpin and Suraj Kalati take a seat with TMI Editor Eleanor Hill in the virtual TreasuryCast studio to determine why real-time treasury matters now more than ever.Amongst a wealth of real-time...

21:08

TIS EPO: Reimagining the World of Enterprise Payments

TMI's Eleanor Hill was delighted to invite Joerg Wiemer, Co-Founder and Chief Strategy Officer (TIS) to discuss the concept of Enterprise Payment Optimization (EPO), a reimagining of how organizations can achieve...

15:02

To Step Out or Not to Step Out? That is the Question

Spotify's Senior Treasurer, Niklas Muhrbeck, alongside two experts from J.P. Morgan Asset Management, Jemma Clee and Amir Mota, provides an overview of step-out strategies for corporate investors, and advice on how...

00:00

Advancing Digital Treasury: Next Steps

TMI’s Eleanor Hill welcomes Rowan Austin, Conor Maher and Nick Pedersen (NatWest) into the TreasuryCast studio to determine how treasurers can move beyond a basic digital treasury landscape towards a more efficient...

24:15