25 March 2021
Paragon Banking Group PLC
Closing of Green Bond
Paragon Banking Group PLC ("Paragon") is pleased to announce that it has today successfully completed the issuance of £150 million in Tier 2 Green Bonds, due 25 September 2031.
The notes have a credit rating of BB+ (Fitch), with an optional redemption from 25 June 2026 to 25 September 2026.
A tender process was concurrently launched to repurchase Paragon's existing £150 million 7.25% Tier 2 bond, ahead of its scheduled optional call date of 9 September 2021. 87.3% of the investors (£130.9 million) opted for their bonds to be repurchased by Paragon on 25 March 2021.
The proceeds of the green bond will be allocated to green loans incentivising landlords to mitigate the impact of climate change, specifically Green Residential Real Estate loans in England and Wales with an EPC rating of "A" or "B".
Nigel Terrington, Chief Executive, said: "We are the first UK bank to issue subordinated green bonds and we are delighted to have received overwhelming support from the investment community on our plans to put sustainable lending at the heart of our strategy. This Green Bond demonstrates our commitment to support more landlords with products aimed at improving the energy performance of their rental properties, reducing carbon emissions as well as energy bills for tenants."
The notes will bear interest of 4.375% per annum until 25 September 2026, and then at a rate equal to the initial margin of 3.956% per annum plus the applicable 5 year benchmark gilt rate. Interest is payable on 25 March and 25 September in each year, commencing on 25 September 2021.
The Notes will be traded on the Main Market of the London Stock Exchange and the Sustainable Bond Market of the London Stock Exchange.
Paragon's Green Bond Framework conforms with the ICMA Green Bond Principles and has been validated by Sustainalytics, a leading ESG ratings provider. Additionally, Paragon will publish an annual report detailing the allocation of the proceeds to the green loans and the associated carbon savings.
Barclays, BofA Securities and UBS Investment Bank acted as lead managers on the transaction.
For further details please contact:
Ciara Murphy, Deputy Company Secretary
0797 498 0152
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