Media digest: April & May: Institutional Investor, FT, South China Morning Post, Bloomberg, Reuters + more

Here’s some of the green bonds stories that caught our attention in April and May. Media interest shows no sign of letting up.

 

Market Standards

Institutional Investor, Mark Carney: Green Investments need ground rules, fast
Craig Mellow

High profile input into discussion on standards in the green bond market from Bank of England’s governor. Institutional Investor has more.

Global investors could pour trillions of dollars into green technology that would help the world meet the greenhouse gas reduction targets agreed on in Paris this past December. But they need accounting benchmarks and market infrastructure that the financial world has only begun to develop – and time is running short. This was the conclusion of Mark Carney.

 

Bloomberg, Municipal Market is `Wild West' for Green Bonds, TIAA Says
Elizabeth Campbell

With 59 muni green bond issuances, of which only six had second reviews and one got certified under the Climate Bonds Standard, the “wild, wild west” label used to describe the state of the municipal market is fairly accurate.

The $3.7 trillion municipal market is the “wild, wild West” for so-called green bonds as issuance of such deals ramps up, despite no industry-standard criteria for the securities, according to Joel Levy, group head of municipal fixed income at TIAA Global Asset Management.

 

International Financing Review, Green bonds: bring in some rules or bring in the regulators
Keith Mullin

Keith Mullin, a strong advocate of stringent standards in the green bond market, calls on ICMA to become tougher.

Maintaining stringent standards may lead to fewer deals but at least you should be able to guarantee that those that do get the label transcend empty marketing or vague statements of intent. The labelled GB market needs to climb the ladder of clear and transparent rules – and yes I mean rules rather than principles. And yes, at the potential expense of huge primary flows into the labelled market. 

 

China

Financial Times, Can China turn green?
Gillian Tett

The FT quotes former US Treasury secretary claiming, “roughly half of new buildings going up in the world [now] are going up in China”. In that context, greening world’s second largest economy’s buildings sector will be crucial to reducing global emissions and tackling climate change.

…if only the world could persuade China to construct those new buildings in an energy-efficient way, we might have the means to reduce global warming. Or, to put it another way, if you want to make the world greener, targeting the way that China constructs its buildings might be more effective than endlessly fretting about buildings in countries where the structures are already built.

 

South China Morning Post, Development banks tipped to give China’s green bond boom a further boost
Eric Ng

South China Morning Post predicts that following jumbo issuances from Chinese commercial banks earlier this year, it’s the development banks that are now set 'take the torch' and play an important role in further expanding the country’s green bond market.

The boom in mainland China’s nascent green bond market is set to continue this year after deal volume ballooned in the first quarter, with mainland and multilateral development banks tipped to take the torch after a spate of jumbo issuances by commercial banks early in the year.

 

Global Capital, China on track for expansive growth in green bonds
Narae Kim

After a flurry of green bonds from Chinese commercial banks and the first green bond from non-financial corporate in the domestic bond market, Global Capital talks about ‘exponential growth’. The article also raises the matter of enhancing quality of issuance in the Chinese market.

“Market education should also take place along the way”, said Sean Kidney, chief executive and co-founder of the CBI. “There should be market governance structures that protect against potential fraud, including inadvertent fraud from a lack of understanding,” he said. “Regulations are a start. We now need a verification and certifications system suitable for the huge market we expect in China.”

 

South China Morning Post, China’s environmentally-friendly green bond issuance set to accelerate
Alun John

Referring to HSBC’s report from earlier this year, the author focuses on growing anticipation of the official green bonds guidelines for Chinese corporates. They are set to be released by the National Association of Financial Market Institutional Investors (NAFMII) in the next few months.

We find it interesting that some Chinese corporates are issuing green bonds before official NAFMII guidelines are formally released. We think this is evidence that Chinese firms are keen to demonstrate support for China’s latest five-year plan.

Global Capital, CBI, IISD launch China Roadmap for green bonds

At the beginning of May, in collaboration with IISD, we launched the China Roadmap 2016 series of reports that explore how to scale up green bond issuance and investment in China. Global Capital reports on the story.

China is steadily progressing its green finance systems,” said Sean Kidney, chief executive of CBI, “…This China Roadmap series is designed to give policy makers options and directions that will support rapid and sustainable growth in both domestic and international green bonds markets.”

 

Markets

Huffington Post, Greening the Trillions
Nick Robins, Simon Zadek

An insightful article from Nick Robins and Simon Zadek explores the global finance community’s efforts to mobilize private finance for sustainable development. The authors put green bonds high on the list of priorities as one of the new mechanisms to channel private capital to green assets.

So far, green bonds represent less than 1% of the global fixed income market - but the prize that lies ahead is a market measured in the hundreds of billions if not trillions that not just increases access to finance, but also reduces the cost of capital, which can often be the biggest financial burden for critical green infrastructure.

 

Reuters, Corporate green bond issuance could triple this year -S&P
Nina Chestney

In April, Standards & Poor’s announced its predictions for the corporate green bonds issuance to triple in 2016, reaching up to $28 billion – growth that’s strongly linked to deals expected to come out of the Chinese market.

"If the Chinese corporate green bond market takes off this year ... this could add around $13 billion to corporate green bond issuance in 2016, bringing total corporate green bond volumes to $28 billion," Standard & Poor's said in a report.

 

FTSE Global Markets, S&P points to rise in climate bond issuance

Forces driving rapid market growth include a growing pipeline of new issuance, a burgeoning Chinese market, emerging interest from US utilities, strong investor demand, and increasing environmental disclosure requirements.

 

Independent Online, France to issue ‘green bonds’

Independent reports on François Hollande’s announcement that the French state will ask public banks, quasi-state fund Caisse des Dépôts, the French development agency AFD and investment banks to launch green bonds.

France announced Monday it was raising its renewable energy goals and would become the first country to issue ’green bonds’ to fund projects which benefit the environment.

 

Responsible Investor, French government seeks green bond issuance from Caisse des Dépôts and development agency
Vibeka Mair

Andrew Whiley, Communications Manager at the Climate Bonds Initiative, said: “More issuance is exactly what the green bond market needs to quickly build more depth and liquidity. French banks and insurers taking a lead will influence others to follow. This is a positive national policy direction from Hollande. We need other governments to take notice.”

 

Environmental Finance, Personality of the year: Sean Kidney, Climate Bonds Initiative

We are extremely proud that the founder and CEO of the Climate Bonds Initiative was chosen a Personality of the Year at Environmental Finance’s Green Bonds Awards 2016.

In addition to arguing the case for green bonds in China, Kidney continued to be one of the market's biggest cheerleaders in 2015, a mission that sees him travel to all corners of the globe. The CBI's sometimes outspoken blogs are well read and his voice is one of the most influential in the market – even if not everyone agrees.

 

Emerging Markets, CBI’s Kidney: MDBs and governments must step up fight against climate change
Virginia Furness

Sean Kidney stresses the role that governments and development banks need to play for the green capital markets to grow faster. Virginia Furness reports.

“Green bonds are an easy proposition,” said Kidney. “But the scale-up that is happening in that market isn’t happening fast enough. We need clear guidance and benchmark issuance from development banks and governments.”
 

Moody’s predictions

Moody’s made headlines in April after sharply revising its 2016 green bond issuance forecast from $50 billion to almost $70 billion – mainly due to large issuances from Chinese financial institutions in Q1.

Reuters, Moody's lifts green bond issuance estimate to $70b this year
Nina Chestney

The volume issued in the first quarter of 2016 reached $16.9 billion, nearly three times the amount issued in the first quarter of last year, mainly driven by green bond issuance by Chinese financial institutions.

 

ShanghaiDaily.com, China becomes top green bond issuer: Moody's

China replaced the United States as the top issuer of green bonds geographically in the first quarter (Q1) of 2016, credit rating agency Moody's said in a report.

 

Nikkei Asian Review, China leads green bonds boom with more in pipeline
Nicky Burridge

Such is the boom in China's nascent green bond market that Moody's Investors Service recently revised its 2016 forecast for total global issues from $50 billion to almost $70 billion.

 

EconoTimes, Moody's: China Bonds Drive Q1 Issuance Record; Global Market Set for New Full-Year High

More generally, China eclipsed other issuers in the first quarter as issuance by Chinese institutions reached $7.9 billion, accounting for nearly half of the quarter's total volume and placing the country as the top issuer geographically for the first time.

 

New Bonds

Out of several green bonds brought to the market in April and May, it was the bond from the Chinese carmaker Geely, that excited media the most. This bond was issued to finance greening of London black cabs.

 

Financial Times, Geely’s Auto green bond to clean up London’s air

Investors from some of the world’s most polluted cities are backing London’s efforts to clean up its air after Geely Auto, maker of London’s black cabs …. sold $400m in so-called ’green bonds’ …. The deal …. will help Geely develop the TX5, a hybrid battery-powered car with an aluminium body to be built in Coventry, the one-time centre of the British car industry.

 

Fortune, London's Black Cab Company Has Raised $400 Million to Go Green
Claire Zillman

The company that makes the city’s iconic black cabs said that it has raised $400 million through the sale of green bonds to electrify its taxi fleet. Zhejiang Geely Holding Group or ZGH, which owns London Taxi Co., said Friday that it had raised the large sum to finance to “the development of zero-emission capable vehicles.

 

Bloomberg, Automakers Rev Up Green Bonds for Hybrids and Electric Vehicles
Justin Morton

Chinese electrical vehicle companies are growing interested in green bonds, according to Sean Kidney, chief executive of the Climate Bonds Initiative. ‘China has a very active program of switching vehicles to electrical for both air pollution and climate change reasons,’ he said.

 

Finance Asia, Geely sprays London’s black cabs with green bond
Jackie Horne

The Chinese government has ambitions to lead the world as green bond advocate and its companies are generally setting a good example following a voluntary green bond standards established by the group of market participants and the London-based Climate Bonds Initiative.

 

More on this story:

http://www.china.org.cn/business/2016-05/20/content_38496993.htm

http://www.businessgreen.com/bg/news/2458930/green-bond-raises-usd400m-for-london-s-ev-black-cab-fleet

http://www.chinadaily.com.cn/bizchina/motoring/2016-05/20/content_25386504.htm

https://www.environmental-finance.com/content/news/geely-green-bond-receives-warm-reception-from-pension-funds.html

 

Bonds certified under Climate Bonds Standard

We’ve seen a flurry of bonds certified under the Climate Bonds Standard in April and May. Media reports on some of the key issuances are below.

 

San Francisco Public Utilities Commission

FTSE Global Markets, San Francisco utility leads on certified green bond

The San Francisco Public Utilities Commission (SFPUC) has reportedly issued the first certified green bond under the Water Climate Bonds Standard, an investor screening tool that specifies the criteria that must be met for bonds to be labelled as ‘green’ or earmarked for funding water-related, low carbon initiatives.

 

Reuters, San Francisco Public Utilities Commission to issue green bonds
Rory Carroll

The certification comes from the London-based Climate Bonds Initiative, which developed the standard using a technical working group of academics and experts in the sector.

 

Cities Today, San Francisco issues world’s first climate-certified water bond
Nick Michell

The Climate Bonds Water Criteria have been created to provide investors with verifiable, science-based criteria for evaluating bonds earmarked for financing sustainable water infrastructure projects.

 

Water World, San Francisco Public Utilities Commission issues world's first certified green bond for water infrastructure

“Having a prominent public authority like SFPUC issue the first bond certified against the Water Climate Bonds Standard is a tremendous vote of confidence. It’s a public demonstration that the Standard provides verifiable, science-based criteria for evaluating water-related bonds that are relevant and applicable for the international bond market,” said Sean Kidney, CEO, Climate Bonds Initiative.”

 

Responsible Investor, RI ESG Briefing, May 19

Third-party verification that the issue met the Climate Bonds Standard came from Sustainalytics, the ESG research firm.

 

Axis Bank

International Business Times, Axis Bank plans to raise $500 million via green bonds: Report
S V Krishnamachari

Axis Bank, India's third-largest private bank, will be raising $500 million via green bonds to fund clean (renewable) energy projects.

 

LiveMint, Axis Bank raises $500 million via green bonds,

Axis Bank has raised $500 million through green bonds from the international market, the first such issue for the private lender.

 

MSN, Axis Bank prices USD 500m maiden green bonds at 2.87 pc

This is the first 'labelled climate bond initiative certified bond issued by a bank from Asia and also the first Indian green bond to be listed on the London Stock Exchange.

 

Environmental Finance, Axis Bank tightens price on oversubscribed green bond
Graham Cooper

The issue is the first Asian bank to be certified by the Climate Bonds Initiative and its proceeds will be used for financing or refinancing of renewables and low-carbon transport projects. The notes will be listed on the London Stock Exchange.

 

Economic Times, Axis Bank raises Rs 3,365 crore via green dollar bonds 

The bond sale has obtained a stamp from the Climate Bonds Initiative, an international body focusing on mobilising the $100 trillion bond market for climate change solutions.

 

Business Standard, Axis Bank hits global market with green bonds

The unsecured senior bonds issue is rated by all the three international ratings agencies.

 

IFR Asia, Axis Bank secures sizable Green following

 

Westpac

Bloomberg, Westpac Raises $360 Million for Renewable Energy, Green Buildings
Jessica Shankleman 

“Westpac Banking Corp. Australia’s fourth-largest lender by assets, raised A$500 million ($360 million) through its first green bond sale to fund renewable-energy projects and low-energy commercial buildings.”

 

Environmental Finance, Westpac enters green bond market with deal for real estate
Sophie Robinson-Tillett

The bond is certified by the Climate Bonds Initiative and audited by EY. Proceeds will be used to finance an A$1b portfolio of projects, with a focus on low-carbon commercial buildings and wind energy.

 

Business Green, Westpac raises $360m in green bond sale for clean building push
Jocelyn Timperley

Siobhan Toohill, head of sustainability for Westpac group, [reported that] the strong investor response the bond received reflects a rising appetite among investors and customers for “products that have a positive impact on the economy and environment.”
 

Renew Economy, Westpac joins green bond market with $500 million issuance
Sophie Vorrath

Westpac said on Thursday the issuance had been certified by the Climate Bonds Initiative, and had already elicited a strong response from investors, including the Clean Energy Finance Corporation, which has committed $90 million as a cornerstone investor.

 

ABN Amro

Environmental Finance, ABN Amro's second green bond meets strong demand from investors
Hamza Ali

…like the first green bond, environmental social and governance ratings agency Oekom provided a second opinion on its use of proceeds and verified them against the Climate Bonds Initiative's Climate Bond Standards.

 

Global Capital, ABN reveals ‘undeniable’ pricing difference for green, Tyler Davies

ABN Amro’s final book was approaching €2bn orders with interest from more than 120 investors. Of those involved, only 8% had no specific interest in green assets, while 56% had dedicated portfolios for sustainable bonds.

 

Nordex

SeeNews.Renewables, Climate Bonds lauds Nordex's green Schuldschein
Sean Kidney

Sean Kidney’s comment on the Green Schuldschein issued by German wind company and certified under the Climate Bonds Standard.

German wind company Nordex is the first Schuldschein issuer to label its issue as green. The green issue is verified under the Climate Bonds Standard and sector specific Wind Standard.

Environmental Finance, Nordex doubles size of green Schuldschein to €550m
Hamza Ali

The proceeds of the Schuldschein will be used to provide the cash portion of Nordex's recent acquisition of Acciona Wind Power. Additional capital raised from the upsizing will be used to repay an earlier corporate bond issued in 2011.

 

Flexi Group

Environmental Finance, FlexiGroup launches ABS with green tranche
Hamza Ali

Australian consumer lender FlexiGroup has launched an A$260 million ($200 million) asset backed security (ABS) with a green tranche.

 

Sunday Morning Herald, FlexiGroup first to issue 'green securitised bond' to fund solar financing
Shaun Drummond

FlexiGroup is the first Australian company to issue a "green" asset backed security to fund its solar panel installation financing.

 

SeeNews.Renewables, FlexiGroup issues AUD-50m green bond, Australia's 1st
Militsa Mancheva

The green tranche, which is backed by photovoltaic (PV) receivables, has been certified by the Climate Bonds Initiative (CBI) in London. It links to the size of the underlying solar assets.

 

Money Management, AGL Solar partner issues Green Bond
Nicholas O'Donoghue

By gaining Climate Bonds Certification, FlexiGroup has assured investors of the green credentials of this bond and set a best practice example or future domestic issuers" said Climate Bonds Initiative chief executive, Sean Kidney.

 

London Stock Exchange partnership with Climate Bonds Initiative

In April, London Stock Exchange became a Climate Bonds Partner. It is the first global exchange to join the Climate Bonds Partnership Program.

 

Law360, London Exchange Joins Green Bonds Initiative
Braden Campbell

The London Stock Exchange Group became an official partner Thursday of the nonprofit Climate Bonds Initiative, vowing to double down on its efforts to grow the green finance marketplace and make it more accessible to environmentally conscious issuers and investors.

 

Responsible Investor, RI ESG Briefing, April 7

The exchange said it is a committed supporter of green finance and in July 2015 launched a full range of dedicated fixed income segments specifically designed for green bond issuance.

 

Energy Live News, London Stock Exchange joins Climate Bonds Initiative
Priyanka Shrestha

CEO Nikhil Rathi added: “We are delighted to become an official partner of the CBI and look forward to further develop the market place; improving access for issuers, transparency for investors and growing the size and breadth of the green bond sector.”

 

More on this story:

http://cleantechnica.com/2016/04/22/london-stock-exchange-group-joins-climate-bonds-initiative/

http://renewables.seenews.com/news/total-joins-solar-promoting-terrawatt-initiative-522232

 

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