4 April 2023
The EIB Group (European Investment Bank and European Investment Fund) and the Instituto de Crédito Oficial (ICO) have invested in the RMBS Green Prado XI securitisation fund launched by Unión de Créditos Inmobiliarios (UCI), a joint venture between Banco Santander and the BNP Paribas Group. EIB Group, ICO and UCI are joining forces for this operation to promote the renovation and construction of residential homes using sustainable criteria in Spain and Portugal. These green investments are part of UCI’s sustainable financing strategy for individuals and condominiums.
The EIB Group will make an investment commitment of €240 million, €200 million of which has already been disbursed by the European Investment Bank (EIB). This amount is split into €121.4 million for class A and €78.6 million for class B. The European Investment Fund (EIF) intends to implement its €40 million commitment in the most senior class in the coming weeks. ICO is investing €100 million class A in this first joint transaction between the three parties, which is based on the securitisation of a portfolio of residential mortgages from Spain with a value of €490 million. The EIB and ICO are purchasing the bonds in this operation in order to promote green investments.
This new residential mortgage-backed security securitisation fund complies with the European simple, transparent and standardised criteria set out in the Securitisation Regulation (EU) 2017/2402 and in Sustainalytics’ Green Bond Framework. The transaction also adheres to the regulatory requirements of the Capital Requirements Regulation and short-term liquidity coverage ratio for investors.
The funding will help to grant new green and sustainable loans to individuals and condominiums that are investing in building renovations. Although the investments are mainly focused on building renovations, mortgage loans for the purchase of homes meeting high energy-efficiency standards will also be eligible.
The project will contribute to climate change mitigation and is in line with the European Commission’s Renovation Wave strategy. According to UCI estimates, the final energy savings generated by the total fund in Spain and Portugal are expected to be 396 GWh a year and 100 904 tonnes a year of CO2 (equivalent to the annual energy use of 28 937 households).
The operation will promote energy efficiency, supporting the renovation of existing buildings and the purchase of new near zero energy housing. The project will provide an additional boost to the European Local Energy Assistance (ELENA) programme. This initiative — led by the EIB and the European Commission under the European Commission under Horizon 2020 — offers technical assistance for energy efficiency, renewable energy and sustainable urban transport projects. ELENA grants can be used by public and private sector entities to implement local, regional and national investment programmes. The assistance provided by the ELENA programme over the last 13 years totals around €236 million in grants allocated and disbursed by the EIB to 136 projects.
EIB Vice-President Ricardo Mourinho Félix said: “We are delighted to join forces with ICO and UCI in this securitisation fund to support the energy transition of residential housing in Spain and Portugal. We hope that this first joint operation of the three institutions in a residential mortgage securitisation will help accelerate the transition to more sustainable housing solutions. This transition is one of the lines of action that the EIB Group has been steadily reinforcing in Spain and Portugal as part of its commitment to climate action and environmental sustainability.”
UCI Deputy CEO for Finance Philippe Laporte added: “Despite the complexity of the current environment, this cooperation between the EIB, EIF and ICO on Spain’s first green STS RMBS securitisation operation shows our alignment with the high standards and ambitious environmental, social and governance objectives of UCI since 2020, creating a new sustainable commitment in the residential real estate sector on the Iberian peninsula.”
ICO Chairman José Carlos García de Quevedo said: “ICO’s participation in this operation is part of the ICO Group’s strategy for 2022-2027 of promoting projects with positive environmental and social impact, helping to boost this green transition process.”
“As cities expand, improving energy efficiency is paramount in the context of tackling climate change and something that we are looking to address in collaboration with our partners ICO and UCI. This transaction will make an important contribution to reducing energy consumption and generate substantial energy savings in residential homes, in line with EU ambitions in the area of sustainability,” said EIF Chief Executive Marjut Falkstedt.
