- The bond issue has a value of Euro 8.8 million and a maturity of ten years.
- This is the first green bond issue by a local administrative authority in Romania.
- The municipality was assisted in the private placement by BRK Financial Group, as intermediary, and VMB Partners, as financial advisor.
The first green municipal bonds on the local capital market, issued by the Municipality of Resita, debuted on Tuesday, March 5, at the Bucharest Stock Exchange (BVB)
VMB Partners is the financial advisor to the first issue of green municipal bonds, listed by the Municipality of Reșița on the Bucharest Stock Exchange.
The bond issue is worth Euro 8.8 million and has a maturity of ten years.
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The listing of the bonds of the Municipality of Resșița (RES33E) was realized following a private placement in November 2023, in which the municipality raised Euro 8.8 million, through the issuance of 88,296 non-convertible, guaranteed and denominated bonds in Euro.
“Reșița, city with history, city with future! Dubbed the father of Romanian industry in the interwar period, Resita proves, nearly a century later, that it is an innovative, green city. We are pleased to be the first city in Romania to issue green municipal bonds, and today’s listing on the Bucharest Stock Exchange is an important step in achieving our ambitious green investment plan in Resita”, said Ioan Popa, Mayor of Resita.
“Congratulations to the municipality of Resita, congratulations to the City Hall and the City Council. Today weare witnessing a premiere, Resita becomes the first public authority in Romania to issue green bonds on the BVB. The validation of these bonds as green instruments and the certification of the compliance of funded projects with the UN Sustainable Development Goals were highlighted in the Sustainalytics report. The municipality of Resita has obtained a rating equal to Romania’s from Fitch, and its credit profile is even better than the country’s, rated at bbb+ due to its sustainable debt capacity. Last but not least, congratulations to Mayor Ioan Popa for his deeply responsible economic approach and for the modern vision he is imprinting on this city“, said Valentin Miron, CEO of VMB Partners.
The funds raised by the bond issue will be used to co-finance the project to reintroduce the electric tram in Resita, namely the renewal of the rolling stock of the transport operator (13 trams and 10 electric buses) and the development of the transport infrastructure in Resita.
“We congratulate the Municipality of Resita for the initiative to issue green municipal bonds, which is a double premiere, first because it is the first step of Resita on the capital market and, at the same time, the first green bonds issued by a municipality. In recent years, the Bucharest Stock Exchange has demonstrated that it is a solid partner for attracting funding from companies, county councils and city halls for projects to improve the communities they manage”, a afirmat Radu Hanga, Chairman of the Board of Directors of the Bucharest Stock Exchange.
The bonds have a nominal value of Euro 100, variable interest (EURIBOR + 3.5% p.a.) and mature in 2033. The coupon is payable half-yearly and the principal will be repaid in 5 annual installments (12% in 2029, 18% in 2030, 20% in 2031, 23% in 2032 and 27% in 2033, respectively), and after each repayment, the face value of each bond will decrease proportionally.
“We want the example of Reșița City Hall to be followed by other local authorities to support the sustainable and green development of the communities they represent. Bond issues offer diversification of funding sources for both companies and local administrative authorities and, at the same time, allow a more appropriate financing of projects implemented in the long term and in need of long-term funding”, said Adrian Tanase, General Manager of the Bucharest Stock Exchange.
The municipality was assisted in the private placement by BRK Financial Group (BRK), as intermediary, and VMB Partners, as financial advisor
“For BRK Financial Group, such a listing is a first in recent history, and investor interest in this placement gives us hope that such transactions can be undertaken more frequently. The yield offered by these bonds, as well as the Euro denomination, attracted both retail and institutional investors. We are talking about a series of green bonds, in line with new trends to promote sustainable and sustainable investments. Given the structure of the underwritings in the placement, respectively with a significant share, both numerically and by value, of retail investors, I believe that we will have both orders to trade on both sides of the order book and trades,” said Monica Ivan, CEO of BRK Financial Group.
Reșița thus joins 15 other cities and 5 counties in Romania that currently have bonds listed on the BVB. These are the counties of Alba, Bihor, Cluj, Hunedoara, Timis and the cities: Alba Iulia, Bacău, Bistrița, București, Focșani, Iași, Năvodari, Oravița, Orăștie, Predeal, Siret, Slobozia, Târgu Mureș, Timișoara, Zalău.
The issuer has an early redemption option in 2029.
According to the rating agency Fitch, the Municipality of Resita has a BBB- rating with a stable outlook and a bbb+ credit rating, and according to Morningstar Sustainalytics’ evaluation, this bond issue fulfills the four basic components of the Green Bond principles (Use of Proceeds, Project Evaluation and Selection Process, Management of Proceeds and Reporting Framework).
