Innovatec, an Italian energy-efficiency and energy services company, issues a EUR15m (US$19m), 6-year green bond with coupon of 8.125%. Sole underwriter is JCI Capital. Innovatec is a fully controlled by Kinexia. The investor base was made up of specialist investment firms.
The bond is small in size, but it's high in yield. We’ve previously seen high demand for bonds at the lower end of the investment-grade spectrum, and so we're excited to see high-yield green bonds – it’s a sign that the market is maturing and that it's beginning to provide material benefit to project developers.
In terms of the green credentials, the press release states the proceeds will be for energy efficiency projects. We consider Innovatec a pure-play company aligned with a climate economy, and it’s great to see a pure-play company choosing to label their bonds as green. We have previously highlighted the benefit of labelling also for pure-play companies: It makes it easier for investors to identify the company’s bond issuances as green.
However, Innovatec has not provided a second party opinion on the green criteria of the bond, or details around disclosure and reporting. This isn't just us pushing for that, it's also in the Green Bond Principles. While less crucial for pure play companies than non-pure play corporations, it really would help to have this to provide further transparency for investors.
But, anyway, an interesting development in the green bond market.
