Certified Climate Bonds
Alert: Certified Climate, Masala Bond from NTPC out soon
India’s largest power utility, the giant NTPC is due to issue its first green Masala bond this week. The bond is a Certified Climate Bond with the use of proceeds allocated to solar and wind power projects in India.
NTPC’s Green Bond Framework outlines where the proceeds will be allocated:
- Solar projects or assets (85% or more of the electricity generation must come from solar sources; wholly dedicated transmission infrastructure)
- Wind projects or assets (development, construction and operation of wind farms; wholly dedicated transmission infrastructure).
A Masala Bond is an Indian Rupee denominated bond issued offshore, in this case on the London and Singapore Stock Exchanges.
NTPC is the Indian government power company. At present 76% of its generation capacity is coal based, BUT they have big ambitions when it comes to renewables - they are planning to build 10GW of new solar capacity (to put this in context, they currently have about 35GW of coal) and, depending on the success of this initial issuance, they could bring more green bonds to market in the future.
Bond market observers should take note. This bond issuance is a perfect example of using a fossil fuel balance sheet to finance renewables, from a company who aims to be ‘the world’s largest and best power producer’.
We’d like to see more big, brown, energy companies harnessing their balance sheet for green energy growth.
In case you missed it, we recently wrote a blog about why brown companies should be able to issue green bonds here.
Well done to NTPC on taking a lead!
NTPC is rated BBB- (Stable) by both S&P and Fitch. Details on size, coupon, maturity due out soon… Watch this space.
Second Green Bond for Akuo Energy
France’s Akuo Energy has issued a EUR 44m (USD 48.6m) green bond to finance green power plants. The private placement has an annual coupon of 5.5% and a 5-year tenor.
This is the Group’s second green bond and it is EUR 10m larger than its inaugural issuance of June 2015. The latest offering is a private placement and has attracted a number of new investors, including Mirova and previous investors such as Zencap AM.
The proceeds will be used to finance ‘green power plants.’Akuo has all of its generation capacity in clean energy with wind and solar power making up 95% of its generation capacity. Additional projects are being planned and developed in hydro power, biomass, marine energy and energy storage. See more here.
Akuo has provided investors with strict commitments around the traceability of funds and has committed to detailed reporting on tons of CO2 avoided.
Octo Finances was the Lead Manager and Bookrunner.
Central American Bank of Economic Integration (CABEI) issues first green bond for ZAR 1.03bn (USD 74m)
Here’s a little story you may have missed. Banco Centroamericano de Integración Economica CABEI has just priced its first green bond in South African Rand (ZAR). The bond will be offered to Japanese retail Uridashi investors. Daiwa is the underwriter.
According to a joint statement from CABEI and Diawa, the proceeds will be lent to energy efficiency and renewable projects in the Central America.
CABEI is a Honduras based multinational development bank with 12 member countries, specialising in microfinance. To date is has provided USD 5.3bn in loans for more than 220 energy-related projects.
Green Bond Gossip
Potential Climate Bond from MEP Werke in the pipeline
German solar power provider MEP Werke have applied for Climate Bond certification for a EUR denominated green bond due out later in the month.
Proceeds will be allocated to solar PV developments.
MEP Werke are a Climate Bonds partner. A full list of partner organisations is available on our website here.
Beijing Enterprises Water Group Issues First Green Panda bond for RMB 700m (USD 105m)
Further details on use of proceeds to come…
A Panda bond is a Chinese renminbi-denominated bond from a non-Chinese issuer, sold in the People's Republic of China. This bond qualified as it is being issued by Beijing Enterprises’ overseas subsidiary (Bermuda registered, listed on the Hong Kong stock exchange).
East Kentucky Power Cooperative plans to build 8.5MW solar plant, with funding expected to come from Clean Renewable Energy Bonds (CREBs) bonds. CREBs are a type of tax credit bond that can be issued by US municipalities to finance clean energy. More here.
ADB eyes up issuing USD 3bn per year by 2020
The Asian Development Bank aims to expand lending to clean energy projects to at least USD 3bn per year by 2020, by which time it also intends to double its overall climate financing to USD 6bn annually.
ADB has already taking big steps on renewables, including backing a world first Certified Climate clean energy project bond from Philippines based APRI in May this year.
The Last Word…
People’s Bank of China Zhou Xiaochuan said that China will invest USD 600bn annually in ‘green’ sectors over the coming five years – twice the current amount spent on environmental technologies.
More here from China Dialogue.
Till next time!
The Markets Team
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