Car manufacturing company Daimler entered the green bond market with a €1 billion ($1.2 billion) offering to develop green projects with significant upfront investments, such as battery electric vehicles and their production. 

The proceeds are eligible for four categories: clean transportation, energy efficiency, pollution prevention and control and renewable energy.

Daimler believes that green finance is an important element of its sustainable business strategy. Daimler’s debtholders are also increasingly interested in the company’s (environmental, social and governance) ESG strategy and, specifically, in the CO₂ strategy.

External reviewer Cicero awarded the bond a ‘Dark Green’ rating on its Shades of Green scale, reflecting its credentials. The rating is only given to projects that ‘correspond to the long-term vision of a low carbon and climate-resilient future’.

“With our green bonds we are pushing forward the transformation of our company towards CO2-neutral mobility and production. The proceeds are used exclusively for the financing of green projects. The bonds follow the principles of the Daimler Green Finance Framework, which has a ‘Dark Green’ rating from Cicero. The strong demand for our green bonds demonstrates the attractiveness of Daimler to investors, as well as their confidence in our sustainable business strategy,” said Kurt Schäfer, head of treasury at Daimler.

Daimler saw a tightening of the spread on the issue to 25 basis points below their conventional curve, which they attributed to a green premium, or ‘greenium’. This green impact also led to a sustained tightening of Daimler’s outstanding euro bonds.