BBVA and PGGM entered into €2 Billion ESG-Linked Corporate Loan Credit Risk Sharing transaction

By linking capital costs to sustainability targets, this transaction sets a new industry benchmark for integrating ESG factors into capital markets. It also marks BBVA’s fourth partnership with Dutch pension fund investor PGGM, further strengthening a long-term collaboration focused on advancing sustainable finance.

In this first-of-its-kind structure, the transaction’s ESG-linked pricing mechanism adjusts the cost of capital based on the underlying companies' progress toward key sustainability goals. These include reducing greenhouse gas emissions, enhancing water efficiency, and improving gender diversity in leadership positions, among others. This innovative approach reflects BBVA and PGGM’s shared commitment to embedding ESG standards across
financial products.

Structured to meet the European Union’s Simple, Transparent, and Standardized (STS) criteria, the transaction delivers 81% capital relief for BBVA, enhancing the bank’s capital efficiency. The portfolio comprises loans to large corporate clients across the United States, Spain, and other European markets, underscoring BBVA’s global reach and commitment to
sustainable growth.

“This ESG-linked synthetic securitization is a milestone in sustainable finance, demonstrating the potential for capital markets to drive meaningful ESG impact,” said Pablo Fenoll, Head of Portfolio Management at BBVA CIB. “Our continued partnership with PGGM highlights our dedication to creating innovative capital solutions that support our clients’ sustainability objectives.”

For PGGM and its end-investor PFZW the transaction reflects their ambition to contribute to the Sustainable Development Goals and to support banks in enabling and motivating their clients to transition and become net-zero.

“Collaborating with BBVA, who is a highly valued risk sharing partner with strong sustainability credentials, in incentivizing its corporate client base to adopt more sustainable business practices fits very well with those ambitions” added Meindert de Jong, Director of Credit Risk Sharing at PGGM.

With this transaction, BBVA reinforces its strategy of leveraging credit risk sharing for capital efficiency while advancing its sustainability agenda, establishing a pioneering model for ESG-driven financial solutions.

About BBVA
BBVA is a customer-centric global financial services group founded in 1857. The Group has a strong leadership position in the Spanish market, is the largest financial institution in Mexico, and it has leading franchises in South America. It is also the leading shareholder in Türkiye’s Garanti BBVA and has an important investment, transactional and capital markets banking business in the U.S. Its responsible banking model aspires to achieve a more inclusive and sustainable society. It has 715 billion in total assets and serves 85 million of customers with its 112,465 employees.

About PGGM Investment Management
PGGM Investment Management is part of the Dutch not-for-profit pension fund service provider PGGM. It fulfills a social mandate: the sustainable investment of the pension capital of around three million participants of PFZW, the pension scheme for the Dutch health and welfare sector. On 30 September 2024, PGGM IM managed EUR 257 billion in public and private markets globally.