On March 16, 2021, Deutsche Bank and Continuum Energy Levanter Pte Ltd, a subsidiary of Continuum Green Energy (Continuum) executed the world’s 1st green hedging transaction based on a specially designed green hedge framework with a second party opinion.
- Both the firms are working together to develop a green hedge framework to support the implementation of Continuum’s green bond framework.
- External reviewer, Cicero Green, has issued the second party opinion on the green bond and the green hedge frameworks
Hedge: It is an investment that protects finances from a risky situation, formed to minimize or offset the chances of assets losing value.
Green Hedge Framework:
- The Green bond proceeds will be used for renewable energy projects in India, in which green project revenues will be generated in the Indian rupee while the principal and interest are to be repaid in dollars, giving rise to the Forex risks.
- Thus this green hedge with a framework manages the currency exposure while ensuring investors receive their returns on the green bond.
- The forex (Foreign Exchange) hedge solution is for a tenor of 6 years in US dollars/Indian rupees on a notional of $185 million.
- The solution is based on Continuum’s green bond framework and linked with their green bond US dollar primary issuance.
Green bond: It is a type of fixed-income instrument that is specifically earmarked to raise money for climate and environmental projects. The majority of the bonds are asset-linked bonds.
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On November 9, 2020, Tata Consultancy Services (TCS) signed an agreement with Deutsche Bank AG, under which TCS will acquire 100% of the shares of Postbank Systems AG(PBS) from Deutsche Bank AG.
About Deutsche Bank:
Establishment – 1870
Headquarters – Frankfurt, Germany
CEO -Christian Sewing
About Continuum Green Energy (Continuum)
Establishment – 2009
Headquarters – Mumbai, Maharashtra
CEO – Arvind Bansal