A first issue under the world’s first dedicated green covered bond legislation came a step closer today (Wednesday) as Moody’s assigned a provisional Aa3 rating, on review for upgrade, to NordLB Luxembourg Covered Bond Bank renewable energy covered bonds.

Legislation for lettres de gage énergies renouvelables came into force in Luxembourg in July 2018 and is the only distinct legislation relating to green or social covered bonds, with others issued under existing general covered bond laws.

NordLB Luxembourg Covered Bond Bank (CBB) has been aiming to be the first issuer of the product.

The issuer previously told The CBR that it was targeting a debut of at least €300m and, according to Moody’s, the cover pool totalled approximately €358.3m as of 31 August. It is comprised of 25 renewable energy project loans, 20 of them windfarms and five solar energy projects, in Ireland, France, the UK, Germany and Sweden.

Moody’s has assigned the cover pool a collateral score of 31.3%. It expects NordLB Luxembourg CBB to provide minimum overcollateralisation of 14.5% – the minimum consistent with the Aa3 rating – of which 2% will be on a “committed” basis.

The Timely Payment Indicator (TPI) for the programme is Improbable and constrains Moody’s rating. The provisional covered bond rating is on review for upgrade because NordLB Luxembourg CBB’s counterparty risk (CR) assessment of Baa2 is on review for upgrade, and Moody’s noted that an upgrade of the CR assessment would result in an upgrade of the covered bond rating.

NordLB Luxembourg’s last benchmark covered bond was a €500m five year lettres de gage publiques issue in February.

Sparkasse Hannover is set to launch a €250m 10 year no-grow mortgage Pfandbrief in the near future, via BayernLB, DekaBank and NordLB, it was announced today.