BIDV becomes the first bank to issue green bonds in Vietnam

The first bank in Vietnam to issue green bonds

Joint Stock Commercial Bank for Investment and Development of Vietnam (BIDV) has become the first bank to successfully issue green bonds according to the Green Bond Principles of the International Capital Market Association (ICMA) in the domestic market. The proceeds from the bond issuance will be used to financially support green projects, energy saving, emission reduction, and environmental protection under BIDV's green bond framework.

This is the first round of green bonds in Vietnam, rated by Moody's - the world's leading international credit classification organization. According to Moody's green bond framework ratings for credit institutions, Joint Stock Commercial Bank for Investment and Development of Vietnam has achieved a very high rating for support and high-level transparency in project selection, appraisal, lending, and administration.

This issuance of Green Bonds by BIDV has a structure with no collateral, no secondary debt, and no payment guarantee, demonstrating a high level of trust in the capacity and reputation of the issuer. Accordingly, all investors participating in the transaction are insurance companies and fund management companies belonging to the world's leading insurance groups.

According to Mr. Tran Long - Deputy General Director of BIDV, to achieve a high rating in Moody's Green Bond Framework, Joint Stock Commercial Bank for Investment and Development of Vietnam has built a clear strategy for developing green banking and green credit associated with the requirement to promote green credit growth and environmental and social risk management (ESG) in credit granting activities and being ready to finance customers operating in low-carbon, adaptive sectors with climate change.

"Green bond capital will be an effective tool to increase BIDV's capacity in implementing the above strategy. With the determination to join the Government in implementing the commitment to achieve net zero emissions by 2050, we hope that BIDV's pioneering issuance of green bonds according to international standards will inspire other companies. Other organizations work together to build a green future with strong and sustainable development", Mr. Long said.

The green bond framework closely follows international practices

Mrs. Carolyn Turk, World Bank Country Director in Vietnam, said: "This is a meaningful activity before COP28 to support Vietnam's climate goals, contributing to creating a livable planet. The World Bank is pleased to support Vietnam in its efforts to achieve its goal of net zero carbon emissions by 2050. Issuing green bonds by commercial banks is one of many important steps to achieve the goal. With this green bond, BIDV will inspire other corporations and commercial banks to join hands in greening the economy."

In 2022, Joint Stock Commercial Bank for Investment and Development of Vietnam is honored to be one of two pioneers selected to support the development of a Green Bond Framework under the technical assistance program between the State Bank of Vietnam and the German Agency for International Cooperation (GIZ). Accordingly, based on the knowledge acquired from the technical support program and research of the Guidebook for issuing green bonds, social bonds, and sustainable bonds issued by the State Securities Commission of Vietnam, BIDV has drafted a Green Bond Framework in 2022.

In 2023, with technical advice from the World Bank (WB) and the International Finance Corporation (IFC) through the Joint Capital Market Program (J-CAP), BIDV completed construction and promulgated a green bond framework with international best practices in line with ICMA's green bond principles. BIDV's Green Bond framework is highly rated by Moody's Credit Rating Organization, with the SQS2 (very good) rating being the second highest in five rating levels.

According to Moody's assessment, BIDV has built an official Green Bond Framework, including four pillars that comply with the International Capital Market Association (ICMA) Green Bond Principles 2021 (including Appendix 1 June 2022) while demonstrating significant contributions to sustainable development.

As of September 30, 2023, Joint Stock Commercial Bank for Investment and Development of Vietnam has funded about 1,500 customers with 1,900 green credit projects/options with a total outstanding debt of up to VND 71,000 billion, accounting for approximately 5% of BIDV's total outstanding debt, an increase of 11% compared to 2022.