> The IFC on Friday issued a $500m Green Bond in the US market. Rated AAA, the three-year bonds was underwritten by JP Morgan. This is the first IFC green bond targeting US investors. All proceeds go to climate change related investments. Investors include BlackRock, TIAA-CREF, Climate Bond Standards Board member CalSTRS and the United Nations Joint Staff Pension Fund. The coupon is 0.5!
> The last few years have seen a range of government-sponsored energy efficiency loan programs. Where finance for loans has been provided by Governments, such as the US State of Pennsylvania, they have run up against budget ceilings as take-up exceeds expectation. The mortgage-backed securities market showed how loan portfolios could be securitized and a limited funding pool recycled back into more loans; but loan volume is needed to reach the minimum size deals the institutional investor market requires.
Pennsylvania is tackling this issue by setting up a "warehouse" facility that will take over loan portfolios from government and municipalities - starting with its own $35m “Keystone” portfolio - and securitize them. The aim is to generate a secondary market.
Penn Deputy Treasurer Keith Welks, speaking to me in Boston last week at the Ceres Conference, said they’ve been able to set up the warehouse with only a modest outlay for Penn, having successfully attracted private sector participation in the vehicle. The State is not providing any guarantees for the portfolio or the bonds.
The deal has been set up by Cisco de Vries at Renewable Funding. Cisco is famous for having come up with the original PACE (residential energy efficiency and clean energy lending) program in Berkeley, CA.
Pennsylvania deserve a Gold Star for this initiative.
> According to Responsible Investor Korea’s sovereign wealth fund, the KRW41.3trn ($36.2bn, €27.5bn) Korea Investment Corporation, is among the investors in the Swedish Krona Climate Awareness Bonds from the European Investment Bank I mentioned recently. While they only took 2% of the bond, it's interesting that they've now joined European and North American investors in participating.
> More details on Sth Africa IDC green bond: that R5bn ($636m) IDC green bond I mentioned a couple of weeks ago will be, according to this week’s Budget, a 9% 14-year bond. Proceeds go to fund the department of energy’s green energy programme.
> Gerard Wynn of Reuters writes this week about how Europe needs to engage the multi-trillion-dollar bond market in financing renewable energy projects. He notes, however, that bonds can't altogether replace bank loans, which are contracting sharply. Useful piece.