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Paragon becomes first UK bank to issue subordinated Green Bonds

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Paragon Banking Group (“Paragon” or “the Group”), the specialist lender and banking group, has successfully issued £150 million in Tier 2 Green Bonds, becoming the first UK bank to issue a subordinated instrument in the sustainable finance space.

The note was issued at a coupon of 4.375%, and attracted strong interest from the investment community.

The transaction is indicative of Paragon’s commitment to place sustainability at the heart of its long-term strategy. The Group has recently launched green product offerings in the buy-to-let market to support landlords in improving the energy performance of their properties in the private rented sector (PRS).

Paragon also intends to introduce green initiatives across other lending areas. The proceeds of the 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".

Housing is currently responsible for 22% of the UK’s greenhouse gas emissions. Under recent Government proposals, all property let to new tenancies must have an Energy Performance Certificate (EPC) rating of at least “C” by 1 April 2025.

This requirement will apply to the entire PRS by 2028. The Government has an overall target of making the UK’s housing stock carbon neutral by 2050.

Nigel Terrington, Chief Executive, said: “This Green Bond demonstrates our commitment to support more landlords improve the energy performance of their rental properties, reducing carbon emissions as well as energy bills for tenants.

“Under the Government’s ambitious plans, 2.9 million rental homes will need to improve energy performance over the next few years. Government, landlords and lenders should work together to meet this target, and green finance will play a critical role.

"At Paragon, sustainability influences every aspect of our business. We’re delighted to have received overwhelming support from the investment community on our plans to put sustainable lending at the heart of our strategy.”

The Green Bond Framework is line 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. The Framework and Second Party Opinion from Sustainalytics are available on the Investor Relations section of Paragon’s website.

Barclays, BofA Securities and UBS Investment Bank acted as lead managers on the transaction.

For further information, please contact: 

Michael Clarke
07740 090 746
Paragon Banking Group Head of Media Relations