Bank of America raised $500 million in the first sale by a US bank issuer of green bonds. Expect this to be a dam-breaker - now we just need to make sure the myriad banks and corporates that will surely follow comply with robust standards and that green credentials are reviewed by qualified third party actors.
The interest rate was 1.35 percent, 80 basis points more than US Treasury bonds of a similar nature. Bloomberg report that the bond is likely to be rated Baa2 by Moody’s.
The bank says funds were earmarked for environmental projects; we understand that means loans to new and existing renewable energy and energy efficiency projects or companies, but no details have yet been provided about the criteria. We've asked about the all-important third party review, but no answer yet. Gossip has it that it has been "auditor-certified"; it'll be interesting to see what that means when we get more detail tomorrow.
This really is a sign of a fizzing market.
Disclosure: Bank of America Foundation has been a funder of the Climate Bonds Initiative.
