ICO SOCIAL BOND LOAN PORTFOLIO REVIEW

Similar documents
THE INSTITUTO DE CRÉDITO OFICIAL SOCIAL BOND

NACE revision 2 codification

G.D. 332/ STATE AID SCHEME to support investments promoting regional development by creating jobs

Retail trade at constant prices decreases 4.3% in November, as compared with the same month in 2008

Annual Labour Cost Survey (ALCS) 2009

Annual Labour Cost Survey (ALCS) 2010

Consumer Price Index (CPI). Base 2011 January Monthly change Change over last Annual change

RENOVATE AMERICA GREEN BOND PRE-ISSUANCE REVIEW

Overall index Monthly change Change over last Annual change

Wage Structure Survey 2010 Final results

BP s impact on the economy in. A report by Oxford Economics December 2017

Mosaic Solar Loan Trust

Household Budget Survey Year 2009

The average value of the mortgages constituted in June increases 0.2% in the interannual rate, standing at 120,478 euros

Wage decile of the main job. Economically Active Population Survey (EAPS) Year 2011

Living Conditions Survey (LCS) Year Provisional data

Consumer Price Index (CPI). Base 2016 Harmonised Index of Consumer Prices (HICP). Base 2015 September 2018

Quality of Life Survey (QLS) Year 2008

Business Confidence Indicators (BCI) First quarter of 2018

PRESS RELEASE. The Overall Turnover Index in Industry in July 2017, compared with June 2017, recorded an increase of 2.1% (Table 6).

Economically Active Population Survey (EAPS) Third quarter of 2008

Mosaic Solar Loan Trust

Consumer Price Index (CPI). Base 2016 Harmonised Index of Consumer Prices (HICP). Base 2015 October 2018

Overall index Monthly variation Accumulated variation Annual variation January

The average value of the mortgages constituted in September increases 4.2% in the interannual rate, standing at 135,132 euros

DNB Boligkreditt. Scope and Objectives

MANULIFE VERIFICATION LETTER FOR THE CLIMATE BONDS STANDARD SOLAR, WIND

Economically Active Population Survey (EAPS) Second quarter of 2012

Economically Active Population Survey (EAPS) Third quarter of 2013

Session 2: External trade indices Unit value indices vs price indices: Pros and Cons of collection methods

Average expenditure per household in current terms increased by 3.5% in 2017 to 29,188 euros. In constant terms, it increases 2.4%

Consumer Price Index (CPI). Base 2016 Harmonised Index of Consumer Prices (HICP). Base 2015 January 2019

Economically Active Population Survey (EAPS)) Second Quarter 2018

Quarterly Labour Cost Survey (QLCS) Second quarter of 2010

Economically Active Population Survey (EAPS) First Quarter of 2018

Economically Active Population Survey (EAPS) Fourth quarter of 2011

Economically Active Population Survey (EAPS) Forth quarter of 2012

Parent Company Reporting date March 2016

SPAIN * 1. REGIONAL DISPARITIES AND PROBLEMS. Figure 1: Spain. Spain

The redistributive effects of Personal Income Tax reforms during the Great Recession in Spain

Quarterly Labour Cost Survey (QLCS) First quarter of 2018

Annual Wage Structure Survey Year 2015

COLLATERAL REPORT IM SABADELL EMPRESAS 5

Then one-cap subtitle follows, comparisons both in 36-point Arial bold

Cassa depositi e prestiti

KBC. Scope and Objectives

Bankruptcy Proceedings Statistics (BPS)

SUMMARY CHARTS 1 COVERAGE AND SECTORAL STRUCTURE

Economically Active Population Survey (EAPS) Third quarter of 2017

Scotland's Exports

The Harmonised Business Confidence Index (HBCI) decreases 1.0% in the first quarter of 2019 as compared with the fourth quarter of last year

3.1 Scheduled Banks' Liabilities and Assets

A Comparison of Official and EUKLEMS estimates of MFP Growth for Canada. Wulong Gu Economic Analysis Division Statistics Canada.

Banco Popular. Francisco Sancha, CFO. Morgan Stanley 10th Annual European Financials Conference. London, March 25 th, 2015

The average number of bedplaces offered by centres daily for homeless persons increases 4.7% as compared with 2006

SECTION SIX: Labour Demand Forecasting Model

SME INITIATIVE SPAIN APRIL 2015

Type of Engagement: Annual Review Date: 24 October 2018 Engagement Leader: Marion Oliver,

THE UNCAPPED GUARANTEE AND COUNTER-GUARANTEE INSTRUMENT UNDER THE SME INITIATIVE IN SPAIN

Supply and Use Tables for Macedonia. Prepared by: Lidija Kralevska Skopje, February 2016

18th International INFORUM Conference, Hikone, September 6 to September 12, Commodity taxes, commodity subsidies, margins and the like

PGE Polska Grupa Energetyczna S.A. Consolidated report on payments to public administration for 2017

Economically Active Population Survey (EAPS) Fourth quarter 2015

BANCO SANTANDER S.A. MORTGAGE COVERED BONDS INVESTOR PRESENTATION 2Q 17. ( Cédulas Hipotecarias )

31/12/2016. CaixaBank - Covered Bond Investor presentation

Kutxabank Mortgage Portfolio 2Q2016

National Accounts GROSS DOMESTIC PRODUCT BY PRODUCTION, INCOME AND EXPENDITURE APPROACH

Draft Communication from the Commission. A new framework for the assessment of State aid which has limited effects on intra-community trade

41.8 hours per week, respectively. Workers in the. clothing and chemicals and chemical products industries on average worked less than other

Covered Bond Investor Presentation 30 th September 2017

CaixaBank - Covered Bond Investor presentation

Finnish affiliates abroad Basic information. Affiliates. Data on personnel. Respondent s contact details

Société du Grand Paris

NAFIN S ANNUAL GREEN BOND REPORT

Fiscal Policy Strategy

NAFIN S ANNUAL GREEN BOND REPORT

Framework Overview and Second Party Opinion Mitsubishi UFJ Lease and Finance Green Bond

BANCO SANTANDER S.A. MORTGAGE COVERED BONDS INVESTOR PRESENTATION 4Q 17. ( Cédulas Hipotecarias )

Spanish economy A spotter s guide to the Spanish economy

Where do foreigners buy Real Estate in Spain this last year?

INDICATIVE DIRECT GUARANTEE TERM SHEET

Annual Wage Structure Survey Results

Empowerment of social dialogue in trade sector as a contribution to the overarching EU employment and social policy challenges

Loan and Project Financing Policy

The Harmonised Business Confidence Index (HBCI) increases by 0.5% in the third quarter of 2018 as compared with the second quarter.

FTSE Global Choice Index Series Screening definitions

Investors Presentation. May 2017

Investors Presentation. June 2018

PRESS RELEASE. IMPORT PRICE INDEX IN INDUSTRY: May 2017 IMPORT PRICE INDEX IN INDUSTRY: May 2017, y-o-y increase of 4.0%

Environmental taxes in Norway

CaixaBank - Covered Bonds Investors presentation. Data as of 31 st December

Banco Santander Mortgage Covered Bonds Investor presentation ( Cédulas Hipotecarias )

Business investment expected to increase by 4.4% in nominal terms in 2019

Selected results on small and medium-sized enterprises in Germany )

European Social Survey ESS 2012 Documentation of the Spanish sampling procedure

volume 9 number 2 June 2006 Economic Bulletin year 2004)*

CaixaBank Covered Bond Programme

NEW YORK STATE HOUSING FINANCE AGENCY CLIMATE BOND LOW CARBON BUILDINGS CRITERIA OF THE CLIMATE BONDS STANDARD VERIFICATION LETTER

CLIMATE BONDS STANDARD VERIFICATION LETTER

QBE GENDER EQUALITY BOND FRAMEWORK

Transcription:

ICO SOCIAL BOND LOAN PORTFOLIO REVIEW April 11, 2017 Scope In April 12 th 2016, The Instituto de Crédito Oficial (ICO) issued a Second Social Bond aimed at supporting small, medium and micro enterprises with an emphasis on employment creation or employment retention in specific economically underperforming regions of Spain. In early 2017, ICO engaged Sustainalytics to review their Second Social Bond loan portfolio and provide an assessment as to whether the loan portfolio is compliant with the eligibility criteria outlined in ICO s Social Bond Framework document. Criteria The entire loan portfolio that ICO has deemed eligible for the Second Social Bond, consisting of 11,927 loans, was evaluated for overall compliance based on the following general criteria. All loan recipients must: 1. Be a small, medium or microenterprise (SME) as defined in Appendix A; 2. Be located in an economically underperforming region of Spain listed in Appendix B; and 3. Not be engaged in any business activity described under the Exclusionary Criteria in Appendix C or have a record of engaging in illegal business practices. Issuing Entity s Responsibility ICO is responsible for providing accurate information and documents relating to: The details of the SME s that have been provided loans, including number of employees, revenue turnover and/or balance sheet total, location of business, and NACE industry codes; The internal processes undertaken to screen loans for any illegal business practices. This information was provided to Sustainalytics to support its review. Independence and Quality Control Sustainalytics, a leading provider of ESG and corporate governance research and ratings to investors, conducted the verification of ICO s Second Social Bond, issued to fund eligible projects included in ICO s Social Bond Framework, and provided an independent opinion. The work undertaken as part of this engagement included conversations with relevant ICO employees and review of relevant documentation to confirm the alignment with the Social Bond Framework. Sustainalytics made all efforts to ensure the highest quality and rigor during its assessment process and enlisted its Sustainability Bonds Review Committee to provide oversight over the assessment of the review.

Conclusion Based on the limited assurance procedures conducted, nothing has come to Sustainalytics attention that causes us to believe that, in all material respects, ICO s Second Social Bond, issued to fund eligible projects through ICO s second floor facilities, is not in conformance with the eligibility criteria outlined the ICO Social Bond Framework. Part B: Detailed Findings Eligibility Criteria Procedure Performed Factual Findings Error or Exceptions Identified Small, medium, or microenterprise (SME as defined in Appendix A) 11,927 loans to provided on the number of employees per business satisfied the SME criteria. 11,927 loans reviewed, comply with the SME number of employees eligibility criteria. Small, medium, or microenterprise (SME as defined in Appendix A) 11,927 loans to provided on the annual turnover and/or balance sheet satisfied the SME criteria. 9,016 loans reviewed, comply with the SME turnover and/or balance sheet eligibility criteria. Regarding the 2,911 loans without turnover and balance sheet data, it is highly likely that these meet the SME criteria, due to the self-employed status of the loan recipients. For the 373 loans that were made to selfemployed persons with more than one employee, Sustainalytics relied on the confirmation from ICO that these loans were made to SMEs, as this information is tracked in the loan documents that financial intermediaries provide to ICO. See Table 1 Located in an economically underperforming region of Spain (as 11,927 loans to provided regarding 11,927 loans reviewed, comply with the underperforming regions of Spain eligibility criteria. 1

defined in Appendix B) the region of where loans originated satisfied the underperforming region of Spain criteria. Not be engaged in any business activity described under the Exclusionary Criteria (Appendix C) 11,927 loans and 423 unique NACE codes to provided satisfied the exclusionary criteria. 11,927 loans and 423 NACE codes reviewed, comply with the exclusionary criteria. Not have a record of engaging in illegal business practices Engagement with ICO to understand the internal processes that were used to ensure that loans are not provided to businesses with any record of illegal business practices. Confirmation that the internal due diligence process outlined by ICO is robust and it is highly unlikely that loans were provided to businesses engaged in illegal business practices. Table 1: Summary of loans with no turnover or balance sheet data provided Total number of loans with no turnover and no balance sheet data provided - Of the above, number of loans to businesses with 1 employee - Of the above, number of loans to businesses with more than 1 employee Of the loans to businesses with more than 1 employee, number of loans to businesses with between 2-9 employees (micro enterprise) 2,911 out of 11,927 (24%) 2538 out of 2,911 (87%) 373 out of 2,911 (13%) 358 out of 373 (96%) 2

Appendix A- SME Criteria as defined by EU ICO adheres to the European Union s definition and categorization of SMEs 1 which is outlined in the table below: Enterprise category Headcount Turnover* Balance sheet total* Medium < 250 50 million 43 million Small < 50 10 million 10 million Micro < 10 2 million 2 million *ICO s social bond framework requires the SME to fulfill the criteria of 50 million in turnover and/or 43 million in total balance sheet earnings. Appendix B- Economically underperforming regions of Spain: Figures Included in the Original Updated Figures Used for the Eligible Regions Social Bond Framework Second Social Bond Issuance GDP per Capita Unemployment GDP per Capital Unemployment (2013) Rate (Q3 2014) (2015) Rate (Q3 2015) Extremadura 15,497 27.36% 16,166 28.07% Melilla 16,863 30.49% 17,173 32.64% Andalucía 16,843 35.21% 17,263 29.83% Castilla - La Mancha 18,273 28.49% 18,354 24.97% Murcia, Región De 18,392 26.25% 18,929 23.51% Ceuta 18,455 31.95% 19,399 23.25% Canarias 19,312 33.36% 19,900 26.75% Comunitat Valenciana 19,695 25.54% 20,586 21.45% Galicia 19,893 20.25% 20,431 17.74% Asturias, Principado De 20,035 19.96% 20,675 20.33% Cantabria 20,661 19.04% 20,847 17.71% Castilla Y León 21,395 19.40% 21,922 17.58% Spanish National Average 23,214 23.67% 23,290 20.90% 1 http://ec.europa.eu/enterprise/policies/sme/facts-figures-analysis/sme-definition/index_en.htm 3

Appendix C NACE Codes and Descriptions Excluded NACE Codes Description 115 A1.1.5 - Growing of tobacco 510 B5.1.0 - Mining of hard coal 520 B5.2.0 - Mining of lignite 610 B6.1.0 - Extraction of crude petroleum 620 B6.2.0 - Extraction of natural gas 710 B7.1.0 - Mining of iron ores 721 B7.2.1 - Mining of uranium and thorium ores 729 B7.2.9 - Mining of other non-ferrous metal ores 811 B8.1.1 - Quarrying of ornamental and building stone, limestone, gypsum, chalk and slate 812 B8.1.2 - Operation of gravel and sand pits; mining of clays and kaolin 891 B8.9.1 - Mining of chemical and fertiliser minerals 893 B8.9.3 - Extraction of salt 899 B8.9.9 - Other mining and quarrying n.e.c. 910 B9.1.0 - Support activities for petroleum and natural gas extraction 990 B9.9.0 - Support activities for other mining and quarrying 1101 C11.0.1 - Distilling, rectifying and blending of spirits 1102 C11.0.2 - Manufacture of wine from grape 1103 C11.0.3 - Manufacture of cider and other fruit wines 1200 C12.0.0 - Manufacture of tobacco products 2051 C20.5.1 - Manufacture of explosives 2446 C24.4.6 - Processing of nuclear fuel 2540 C25.4 - Manufacture of weapons and ammunition 2910 C29.1.0 - Manufacture of motor vehicles C29.2.0 - Manufacture of bodies (coachwork) for motor vehicles; manufacture of trailers 2920 and semi-trailers 2931 C29.3.1 - Manufacture of electrical and electronic equipment for motor vehicles 2932 C29.3.2 - Manufacture of other parts and accessories for motor vehicles 3511 D35.1.1 - Production of electricity 3512 D35.1.2 - Transmission of electricity 3513 D35.1.3 - Distribution of electricity 3514 D35.1.4 - Trade of electricity 3521 D35.2.1 - Manufacture of gas 3522 D35.2.2 - Distribution of gaseous fuels through mains 3530 D35.3.0 - Steam and air conditioning supply 4110 F41.1.0 - Development of building projects 4120 F41.2.0 - Construction of residential and non-residential buildings 4511 G45.1.1 - Sale of cars and light motor vehicles 4

4519 G45.1.9 - Sale of other motor vehicles 4520 G45.2.0 - Maintenance and repair of motor vehicles 4531 G45.3.1 - Wholesale trade of motor vehicle parts and accessories 4532 G45.3.2 - Retail trade of motor vehicle parts and accessories 4540 G45.4.0 - Sale, maintenance and repair of motorcycles and related parts and accessories 4617 G46.1.7 - Agents involved in the sale of food, beverages and tobacco 4635 G46.3.5 - Wholesale of tobacco products 4639 G46.3.9 - Non-specialised wholesale of food, beverages and tobacco 4726 G47.2.6 - Retail sale of tobacco products in specialised stores 6419 K64.1.9 - Other monetary intermediation 6491 K64.9.1 - Financial leasing 6492 K64.9.2 - Other credit granting 6820 L68.2.0 - Renting and operating of own or leased real estate 6831 L68.3.1 - Real estate agencies 6832 L68.3.2 - Management of real estate on a fee or contract basis 9200 R92 - Gambling and betting activities Source of NACE codes list: http://ec.europa.eu/competition/mergers/cases/index/nace_all.html 5

Disclaimer All rights reserved. No part of this review may be reproduced, transmitted or published in any form or by any means without the prior written permission of Sustainalytics. This review document is for information purposes only and Sustainalytics will not accept any form of liability for the substance of the review and/or any liability for damage arising from the use of this review document and/or the information provided in it. As the review is based on information made available by the client, Sustainalytics does not warrant that the information presented in this review document is complete, accurate or up to date. Nothing contained in this review document shall be construed as to make a representation or warranty, express or implied, regarding the advisability to invest in or include companies in investable universes and/or portfolios. Furthermore, this review document shall in no event be interpreted and construed as an assessment of the economic performance and credit worthiness of the bond. 6