By Owen Poindexter · June 29, 2020
MetLife sold $750 million in green bonds to be invested according to the insurer’s own sustainability framework, marking the first offering of that type by the U.S. life insurer.
“We are pleased with the strong demand for this new funding agreement-backed security,” MetLife spokesman James Murphy told Fastinform on Monday, noting that the sale was the first green bond offering by MetLife. “The high quality order book was oversubscribed and comprised a great deal of interest from accounts focused on sustainable investing.”
The funds raised through the deal will be invested in new and existing projects in renewable energy, clean transport, pollution prevention and control and several other categories defined by the New York-based insurer’s sustainable investment framework. News of the offering by MetLife was first reported by Bloomberg.
The green bond market passed $1 trillion last September, and a number of insurers have jumped on board in the last year. Sun Life Financial offered up 750 million Canadian dollars ($549 million) last August and Generali issued €750 million ($843 million) in green bonds the following month. AXA launched a €100 million “transition” bond for funding the switch to lower-carbon practices in a variety of industries.
Singapore’s Manulife Financial Corporation was the first life insurance company to issue a green bond, for 500 million Singapore dollars ($358.6 million) in 2017.
Insurers are, of course, not the only corporate players selling green bonds, which jumped 49% in 2019. Apple issued €2 billion to fund more energy-efficient products and emission reductions for its suppliers. Verizon became the first U.S. telecommunications company to do so with a $1 billion issuance in February 2019.
AM Best Senior Financial Analyst Jessica Botelho-Young said that green bonds are growing more popular because they enhance a company’s image.
“Insurers that have issued green bonds to date have large retail operations and are keen to boost their brands’ perception and goodwill,” she said.
The same might be said for purchasing green bonds, which the Travelers Companies did in 2019, spending $1.2 billion. BlackRock noted in 2018 that, “Insurers are among the leading investors in green bonds.”
MetLife’s green bond yields 0.7 percentage points above Treasuries, according to the company.