Media Release
March 16, 2021
Deutsche Bank executes world’s first green hedge with Continuum
World’s first specially designed Green Hedge Framework with Second Party Opinion
Deutsche Bank (XETRA: DBKGn.DB / NYSE: DB) and Continuum Energy Levanter Pte Ltd, a subsidiary of Continuum Green Energy (Continuum), 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 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.
For further information please contact:
Deutsche Bank AG
Media Relations
Sarah Stabler
Email: sarah.stabler@db.com
Phone: +65 9116 9970
About Deutsche Bank
Deutsche Bank provides retail and private banking, corporate and transaction banking, lending, asset and wealth management products and services as well as focused investment banking to private individuals, small and medium-sized companies, corporations, governments and institutional investors. Deutsche Bank is the leading bank in Germany with strong European roots and a global network.
About Continuum Green Energy (www.continuumenergy.in)
Continuum Green Energy is a renewable energy group based in India with a focus on large-scale wind farms and solar photovoltaic installations. Continuum Green Energy has six renewable projects across five states in India.
This release contains forward-looking statements. Forward-looking statements are statements that are not historical facts; they include statements about our beliefs and expectations and the assumptions underlying them. These statements are based on plans, estimates and projections as they are currently available to the management of Deutsche Bank. Forward-looking statements therefore speak only as of the date they are made, and we undertake no obligation to update publicly any of them in light of new information or future events.
By their very nature, forward-looking statements involve risks and uncertainties. A number of important factors could therefore cause actual results to differ materially from those contained in any forward-looking statement. Such factors include the conditions in the financial markets in Germany, in Europe, in the United States and elsewhere from which we derive a substantial portion of our revenues and in which we hold a substantial portion of our assets, the development of asset prices and market volatility, potential defaults of borrowers or trading counterparties, the implementation of our strategic initiatives, the reliability of our risk management policies, procedures and methods, and other risks referenced in our filings with the U.S. Securities and Exchange Commission. Such factors are described in detail in our SEC Form 20-F of 20 March 2020 under the heading “Risk Factors”. Copies of this document are readily available upon request or can be downloaded from www.db.com/ir.
Further links on the topic
Deutsche Bank's sustainable finance solutions
Deutsche Bank in Asia Pacific
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