The major green bonds media story in July was the launch of our Bonds and Climate Change: the state of the market in 2015 report. The report first launched in Frankfurt with further launches in Mexico City, New York and London. Another key story was the first labelled green bond from a Chinese issuer (issued in the international dollar market). We also saw stories continuing the debate on greenwashing, pointing out the need for clear standards and transparency, as well as discussing other general market developments.
BONDS AND CLIMATE CHANGE: THE STATE OF THE MARKET IN 2015
Forbes, Strong Demand Pushes Climate Bonds Into New Markets, Mike Scott
Mike Scott describes the state of the green bond market, referring to the Climate Bonds Initiative’s Bonds and Climate Change report.
The climate bonds market has grown by a fifth in the last year to exceed half a trillion dollars for the first time – the total climate-aligned bonds universe now stands at $597.7 billion according to research by the Climate Bonds Initiative for HSBC’s Climate Change Centre of Excellence.
FTSE Global Markets, Climate bonds still modest, but touching at $560bn
Despite a slight error in the total title figure, a great article describing how the global green bond market is still on the rise with encouraging emerging market developments, as seen from the Climate Bonds Initiative’s recent report.
Unlabelled climate-aligned bonds ($531.8bn) account for the bulk, while labelled green bonds ($65.9bn). Also, 32% of this year’s increase of $95bn was due to the rapid growth of the green bond market and 40% was due to climate-aligned rail issuance.
Money Management, Investors respond to climate change with bonds, Jassmyn Goh
Jassmyn Goh refers to the Climate Bonds Initiative’s report in her description of the growth of the green bond universe.
In 2014, $36.6 billion of green bonds were issued, triple 2013 that had $11 billion. The Climate Bonds Initiative expects this growth to continue and green bond issuance in 2015 to reach $70 billion.
Blue & Green Tomorrow, Climate-aligned bonds grow 20% to reach $600bn, Charlotte Malone
Charlotte Malone describes the investor interest in addressing climate change through the bond market. She refers to the Climate Bonds Initiative’s yearly Bonds and Climate Change report as evidence there are low carbon investments available.
Sean Kidney, CEO of the Climate Bonds Initiative, said, “Investors representing $43 trillion of assets under management signed a statement at last September’s UN climate summit about the importance of addressing climate change and their willingness to invest accordingly, subject to meeting their risk and yield requirements. This report shows them that there’s a large and liquid $600 billion universe of bonds they can invest in”
BusinessGreen, Green bond surge spurs climate bond universe towards $600bn, Will Nichols
Will Nichols uses figures from the Climate Bonds Initiative’s report to explain that the unlabelled climate bond market is largely transport-themed.
Transport dominates the climate bonds universe, accounting for 70 per cent of issuances, with clean energy the next biggest on 20 per cent, with marginal issuances for buildings and industry, agriculture and forestry, waste and pollution or water themes, the Climate Bond Initiative's latest state of the market report finds.
CleanTechnica, Climate-Aligned Bonds Soar to Reach $600 Billion, Joshua S Hill
Joshua Hill explains that the climate-aligned bond market is dominated by the transport sector, evidencing the Climate Bonds Initiative’s report.
The report was published by the Climate Bonds Initiative, and represents the only publication that attempts to estimate the global flow of climate-aligned bond financing.
Interestingly, low-carbon transport accounts for $418.8 billion, or 70% of the total climate-aligned bonds market, followed by clean energy, which itself accounts for $118.4 billion, or 20%.
InsideClimate News, More ‘Green Bonds’ Needed to Fund the Clean Energy Revolution, Elizabeth Douglass
As the green bond market is expanding rapidly, as shown by the Climate Bonds Initiative’s report, Elisabeth Douglass discusses how green bonds can lower our global carbon footprint.
A critical piece of the funding needed to transition to a low-carbon world—bond financing for climate saving projects—grew by 20 per cent to nearly $600 billion compared to last year, but it's still short of what's needed.
CleanTechnica, Climate-Related Bonds Hit $600 Billion, James Ayre
James Ayre thanks the growth of labelled green bonds for the climate bond universe reaching $600 billion.
Thanks to recent rapid growth in the labelled “green bonds” sector, the total for climate-related bonds issued over the past decade has now risen to $600 billion, according to a new report from the Climate Bond Initiative. This latest state-of-the-market report noted that around 10% of the total $600 billion figure were now via green bonds — as compared to around 70% via transportation-related bonds, 20% via clean energy–related bonds.
GreenBiz, Green Bond Investments Reach $600 Billion, Robert Kropp
Robert Kropp writes another celebration of the growth of the climate bond market mentioning the particularly strong growth in emerging markets and the recommendations for policymakers.
The report also noted especially strong growth in climate-aligned bonds in emerging markets; in fact, the nation with the largest share of the market is China, where investments total $164 billion, or one-third of the total market. And this year, India became the first emerging economy to issue labelled green bonds; China is expected to follow suit shortly…
The report concludes with 10 recommendations for policymakers to consider in order to help strengthen investor confidence in the green and climate-aligned bond markets.
CHINA
Global Capital, Credit Not Greenness Delivers For China First, Narae Kim
The first green bond issued by China is expected to pave the way for many more. Climate Bonds Initiative’s CEO, Sean Kidney, is hopeful that we will see development in the Chinese green bond market this year.
Market participants agree there will be plenty more green bonds from China, especially once the People’s Bank of China introduces new regulations, which are tentatively scheduled for late Q3 or early Q4…
Kidney said. “I’m hoping to see $5bn-$6bn of green bond issuance out of China by the end of the year.”
Reuters, China’s First Green Bond To Spur Interest For Future Deals, Umesh Desai
Umesh Desai writes about how China is using the green bond market to improve its environmental problems, particularly the country’s poor water and air quality.
China's first green bond has raised $300 million after pricing last week, as the world's largest emitter of greenhouse gases seeks new funding sources to help raise about $1.6 trillion over five years to help fix its environmental problems.
"We see activity around green bonds in a number of different places, but signals out of China are very strong," said New York-based Manuel Lewin, Head of Responsible Investment for Zurich Insurance Group
CleanTechnica, China’s First Green Bond Raises $300 Million, Joshua S. Hill
Joshua Hill writes about China’s success with its first green bond, and how it puts the country on a strong path to work against its environmental problems.
The $300 million offer was five-times oversubscribed, receiving orders of $1.4 billion. This sets the role of green bonds in China on a strong path, as the country attempts to generate around $1.6 trillion over five years to extricate itself from its worrisome environmental problems.
SeeNews Renewables, Update 1 – Goldwind’s USD-300m Green Bond 5 Times Oversubscribed, Tsvetomira Tsanova
Strong demand for green bonds is shown through the large oversubscription of China’s first green bond.
The USD-300-million (EUR 277m) green bond by Chinese wind turbine maker Xinjiang Goldwind Science & Technology has received orders of USD 1.4 billion, the Climate Bonds Initiative (CBI) said today. "Talk about proof of investor demand," the CBI commented after announcing that the bond was nearly five times oversubscribed.
BusinessGreen, Xinjiang Goldwin Launches First Chinese ‘Green Bond’, James Phillips
The recent green bond issuance from Xinjiang Goldwind is a promising sign of an emerging Chinese green bond market according to James Phillips.
Climate Bonds Initiative hailed the bond issue as a potentially important breakthrough for the nascent Chinese market. "The first labelled green bond from a Chinese issuer (denominated in US$ and issued in Hong Kong) just closed, and all we can say is WOW," the group said. "Talk about proof of investor demand... China is getting ready to take the green bond market by storm."
RTCC, China poised for a boom in green bonds, Megan Darby
Emerging economies, in particular China, are pushing the green bond market forward.
By the end of 2015, the country [China] is expected to issue US$4-5 billion worth of the kind of stable, predictable debt institutional investors like… “There is no doubt that China is the most exciting story,” the [Climate Bonds] initiative’s chief Sean Kidney told RTCC.
MARKET DEVELOPMENTS
The Sydney Morning Herald, Australia Lags as a Global Market For Green Bonds Set to Treble in 2015, Sally Rose
Sally Rose, quoting James Gibson, chief executive of BNP Paribas Australia, explains why, despite political interference, we should remain optimistic for the Australian green bond market.
James Gibson remains upbeat on the local market's future, predicting that a groundswell of consumer demand for green energy and sustainable investment options will outweigh any political interference.
"In the short term the regulatory uncertainty in Australia will make it harder for local companies to attract capital for green bonds, but in the long term what really matters to the value of any infrastructure asset is the strength of underlying demand," Mr Gibson said.
Global Capital, KfW Smashes Its Green Sterling Debut With £500m Print, Tessa Wilkie
The German agency KfW issued green bonds in its fourth currency, with the aim of appealing to more investors.
“We began our green bond programme last year with euro and dollar benchmarks and our goal has been to spread our green issuance to other currencies to gain more investors,” said Petra Wehlert, head of new issues at KfW. “We printed in Australian dollars earlier this year and we have now followed that with a £500m print. We aim to deliver a liquid transaction in one go so we’re really pleased to get £500m away — £200m more than our minimum target size. It’s rare to do a deal of that size at the end of July.”
International Business Times, Political Complicacies Keep Australia From Reaping Benefits Off The ‘Green Bonds’, Debleena Sarkar
Another speculation into whether political uncertainty in Australia could hinder its involvement in the green bond market, however a collaboration with the Climate Bonds Initiative sets up for stronger long term growth.
Last year, Stockland attracted the investor’s attention by introducing green bond worth €300 million to invest in Green Star Projects. The Green Star buildings emit 62 per cent less greenhouse gases compared to the average buildings in Australia, which prodded the Green Building Council of Australia to enter into a collaborative venture with the Climate Bonds Initiative, based in London.
Corporate Knights, Market For Green Bonds Lags 2015 Growth Expectations
The green bond market is not growing fast enough to hit the stretch target for 2015 of $100bn. However, Climate Bonds Initiative still expects to see $70bn of green bond issuance by the end of the year.
Kidney said there has been “oddly minimal” U.S. corporate participation in the green bond market this year, and the Chinese entered the market much later than anticipated. Still, hitting $60 billion in 2015 would represent year-over-year growth of 61 per cent. Not the tripling of growth experienced last year, but “still good,” he said.
IFR Asia, Green Bonds Roundtable 2015: Sowing The Seeds for Asia’s Future
IFR Asia reports on its first Green Bonds Roundtable; speakers discussed the growth of the green bond market and, despite scepticism from Asia, concluded that green bonds will soon be the ‘Next Big Thing’ in Asia too.
Green bonds may be emerging as the Next Big Thing in Europe and the US, but in Asia the idea has so far been greeted with a fair dose of cynicism... The seeds, however, are there for the future. China is ramping up efforts to introduce a framework for green financing that will include green bonds as one of its key components. India is pushing hard to generate more energy from solar power. Both are vast markets with enormous funding requirements – and enormous potential.
Super Review, Investors Going Green With Bonds, Jassmyn Goh
According to BNP Paribas, institutional investors are increasingly investing in the green bond market to help grow green infrastructure.
Head of global markets, James Hayes, said BNP Paribas was receiving more and more enquiries from corporates about this [green] avenue of fund raising.
"We expect green bond issuance to increase and diversify as governments across Asia Pacific look to build cleaner urban infrastructure and energy production," he said.
Enterprising Investor, Green Bonds: What’s Right, What’s Wrong, Usman Hayat
A critical look into the green bond market and how to deal with the possibility of ‘greenwashing’.
Green bonds “enable capital-raising and investment for new and existing projects with environmental benefits.” But they are a process rather than a product. That’s because the Green Bond Principles, their chief framework, are a set of voluntary guidelines about process. Market participants are divided on whether to develop standards to determine what is “green” and just how green it is. On one hand, standards could build credibility, but on the other, they could inhibit growth and innovation.
Wealth Management, The Emperor Has No (Green) Clothes, Matthew Weatherley-White
Despite the recent concern of green washing, Matthew Weatherley-White sees green bonds as an excellent source of funding, and stays encouraged as the market is growing.
In the spirit of the perfect not being the enemy of the good, we are encouraged to see green bond issuers coming to market with the clear purpose of creating environmental benefits or efficiencies. Unfortunately, the proliferation of green washing seems poised to rise. To that extent, we encourage caveat emptor among investors: read the use of proceeds, and know what you are buying. To paraphrase a favorite fable: a naked emperor is better than one with green clothes.
Sourcable, Will Green Bonds Raise Billions For Green Buildings?, Jorge Chapa
The Green Building Council of Australia is collaborating with the Climate Bonds Initiative to use the Climate Bonds Standards as a game changer for Australia’s property industry.
This [the Climate Bonds Standard] is great news for the industry. It will avoid duplication of effort in reporting while also giving property owners a clear avenue to attract new sources of funds from large-scale institutional investors seeking low-carbon assets.
Is the agreement a game-changer for Australia’s property industry? Climate Bonds Initiative thinks so, with the organisation’s CEO Sean Kidney arguing “green property bonds now stand to become the largest slice of the green bonds market”.
SeeNews Renewables, USD 19bn Green Bonds in H1 2015, High Hopes For Emerging Markets, Tsvetomira Tsanova
Tsvetomira Tsanova writes on the development of emerging markets entering the green bond market.
A recent report by CBI values the total climate-aligned bonds universe at USD 597.7 billion. Chinese yuan-denominated bonds account for 33% of that, or a total of USD 197.7 billion.
In India, Yes Bank early this year raised about INR 10 billion (USD 157m/EUR 143m) from the country’s first green infrastructure bonds issue. The Export-Import Bank of India later issued a USD-500-million US dollar denominated green bond.
