Paragon Banking Group has issued £150 million in Tier 2 Green Bonds.

It is the first UK bank to issue a subordinated instrument in the sustainable finance space.

The note was issued at a coupon of 4.375%.

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”.

The Green Bond Framework is line with the ICMA Green Bond Principles and has been validated by Sustainalytics, an 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.

Nigel Terrington (pictured), Paragon Group 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.”