Digest this month is divided into three sections: Green Bonds & Covid-19 crisis, CBI News & Market News. Enjoy!
GREEN BONDS & COVID-19 CRISIS
Euromoney, Coronavirus crisis offers green and social bonds chance to prove their worth
While the green bonds market also experiences a temporary slow-down, Euromoney stresses the significantly lower volatility exhibited by this group of investments (green bonds index losing 5%, comparing to 11% for broader corporate index).
However, just $1.8 billion in green bonds was launched in March according to the Climate Bonds Initiative. That’s significantly lower than in February and January, which each registered over $15 billion in issuance.
S&P Global Market Intelligence, Green bonds suffer setback amid market rout but long-term demand to stay strong, Jennifer Laidlaw, Mohammad Taqi
After the bond markets “entirely froze” in March, the green segment already shows strong signs of bouncing back.
Since the end of March, Kidney described "amazing" levels of demand. (…) Kidney described the Iberdrola issue as being a "record" 11.5x oversubscribed, while Engie's issue was 5x oversubscribed. "Clearly demand is still sitting there if you can get a bond out the door," Kidney said. "If you are in the green space and if you can raise debt now at these unbelievably historically low rates, I think you are going to see a lot of people doing it.”
ETF Strategy, What does a green rebound look like?, William Sokol, Senior ETF Product Manager, VanEck
Author says that green bonds “can be an integral piece of financing” the post-Covid-19 recovery. He argues that large scale investments that will provide economic growth and jobs can, at the same time, achieve a second goal: accelerate the decarbonisation of the global economy.
The benefits of green bonds are both tangible and measurable to investors and the public at large, whether experienced on a daily commute on a newly built mass transit system, lower energy bills through renewable energy, or the significant number of jobs generated from building new green and resilient infrastructure – all of which can be financed through green bonds.
Expert Investor, TEG action plan could drive EU recovery roadmap, Elena Johansson
EU Technical Expert Group on Sustainable Finance said in a statement that EU’s recovery plans from Covid-19 crisis should be guided by tools such as the EU taxonomy, EU Green Bond Standard, and Paris-Aligned and Climate Transition Benchmarks.
“Recovery plans should not support environmentally or socially harmful activities, which would worsen the current and future crises, locking in highly polluting infrastructure or promoting activities that do not contribute to social wellbeing for decades to come.”
CityWire, Gov't plans for Covid-19 bounce back must include green bonds, Gemma Woodward
Author, director of responsible investment at Quilter Cheviot, echoes views expressed by many experts this month and claims that “response to coronavirus and focus on climate are not mutually exclusive”.
This could include (…) the introduction of new green government bonds issued by HM Treasury to channel capital into ‘green’ infrastructure projects. France has already raised €20bn (£17.6bn) issuing similar bonds, with the Netherlands, Sweden and Germany close behind.
Reuters, Can 'green stimulus' help corona-stricken economies?
Reuters, in a 2 minutes video, dives into “green stimulus” that can aid crisis-stricken economies.
Pressure is mounting to design spending around climate change. The answer might lie in green bonds, raising debt for funding projects such as renewable energy and public transport.
Explica, In the midst of a health crisis, “responsible” finance comes to the rescue
It is the social issuances that pick up in the coronavirus reality but experts argue that also climate-related investments will come out stronger out of the current crisis.
Kidney is also optimistic: “We are already told that sustainable funds have better results and attract capital. If that is so, and my intuition is that it will, it will galvanize the sector.”
Politico, Follow the green money as coronavirus spreads, Ryan Heath
Author quotes experts that claim that current pandemic is a resilience-test comparable to a climate stress test.
Before the coronavirus crisis hit, there was a fast-building global wave of money flowing toward financing a more sustainable future: from green buildings to renewable energy, from more efficient factories to 479 green bonds in 2019 alone.
Wealth Briefing, How Are "Green Bonds" Coping With COVID-19 Turmoil?
Article offers an explanation as to why corporate green bond indexes perform better than traditional corporates.
The green bond corporate index does not include airlines or energy companies – those sectors were hit by the compounded effects of the coronavirus and the plummeting oil price. However, it does, for example, include utility companies that have well-regulated businesses. These tend to be better prepared for uncertain times, are more forward looking and are often better managed than firms that do not issue green bonds,” he continued. [Bram Bos, lead portfolio manager for Green Bonds at NN Investment Partners].
ENDS Europe, Interview: Could the European Central Bank create money to fund the green transition?
Campaign group Positive Money Europe argues that ECB, in response to crisis, should channel quantitative easing towards green investments.
The central bank's purchase of bonds and corporate and public sector assets hit a monthly average of €80bn in 2016. Why should this newly created money not be used to buy sustainable assets such as green bonds to help push Europe's economy towards increased sustainability, the NGO asked.
In Chinese
FT Chinese, 疫情主题债券五问, 邱慈观 ， 张旭华
Author explains the particularities of themed bonds and how social bonds are different from their green akin.
事实上，绿色债券的发行量远大于社会债券。2018年绿色债券的全球新发行量为1673亿美元，社会债券仅43亿美元。绿色债券的发行人也最多，全球至少有50个国家和地区都已涉入，发行主体包括国际开发类金融机构、政府、银行、企业等。据气候债券倡议（Climate Bonds Initiative）2018年报告统计，房利美、兴业银行、法国政府是当年发行量前三大的发行人.
In French
Libération, A l'épreuve de la crise, la finance responsable se veut plus sociale
Sean Kidney acknowledges that in the face of sanitary crisis, social debt might become a major theme within responsible investments area.
"Nous voyons déjà beaucoup" d'opérations de ce type et "les mesures de protection sociales sont appelées à devenir un thème majeur", note également Sean Kidney, le patron de Climate Bonds Initiative, organisme international de référence en matière de dette responsable.
Novethic Essentiel, Les Green Bonds font preuve de résilience face au coronavirus, Arnaud Dumas
Author acquits readers with opinions of experts from USB and NN Investment Partners: they sing the same tune and stress that coronavirus crisis seems to have “spared green bonds”.
Le chaos semé par la crise du coronavirus sur les marchés obligataires semble avoir un peu épargné les obligations vertes. Les analystes de la banque suisse UBS y voient même une solution de repli, à la fois défensive et susceptible de générer de meilleurs rendements.
Agence Ecofin, Les obligations vertes deviennent des valeurs refuges suite à la crise du Covid-19, Gwladys Johnson Akinocho
Article indicates that in 2020, green bonds issuance might continue at the same rate as before the crisis.
Autant de motivations qui devraient permettre au marché des obligations vertes de croître en 2020 pour mobiliser 350 milliards $ contre 257,5 milliards $ en 2019, selon la Climate Bonds Initiative.
Agence Ecofin, Les obligations vertes devraient être privilégiées par les investisseurs pour leur résistance aux chocs, Gwladys Johnson Akinocho
Views expressed by Head Credit Research at UBS resonate in many French-language articles.
Les obligations durables sont une « opportunité » que les investisseurs en crédit devraient privilégier au détriment des obligations traditionnelles, a affirmé Thomas Wacker (photo), directeur du crédit chez UBS Global Wealth.
In Spanish
Público, La covid-19 desata otro frente de alto riesgo: una crisis política y socioeconómica en América Latina, Diego Herranz
An in-depth and interesting analysis of the political and economical landscape in post-Covid-19 Latin America. He points to the fact that the crisis hit just as the low-carbon investments started to take root in LatAM.
De igual forma, en América Latina empezaba a contratarse bonos verdes "como helados" decían voces inversoras antes de la crisis del coronavirus. Al menos cinco gobiernos y decenas de firmas de la región estaban negociando reconversiones en emisiones de sus deudas hacia proyectos de plena catalogación ecológica.
France24, En plena crisis sanitaria, la finanza "responsable" acude al rescate
While social issues dominate capital markets in the midst of pandemic, Kidney believes that based on recent performance of green investments, the green sector might also be “galvanized” by the crisis.
También Kidney es optimista: "Ya se nos dice que los fondos sostenibles tienen mejores resultados y atraen capitales. Si eso es así, y mi intuición es que así será, ello va a galvanizar al sector".
Cinco Dias, Los bonos ‘verdes’ o cómo financiar la recuperación de la economía y el empleo
Author praises Spanish energy company Iberdrola for issuing a green bond in the midst of the Covid-19 crisis.
En este contexto, Iberdrola es una de las primeras empresas que ha lanzado un mensaje de continuidad y de mirar hacia el futuro: la compañía, primera energética española (…), ha anunciado su intención de seguir realizando inversiones para contribuir a la recuperación de la economía y el empleo.
Expansion, ¿Bonos verdes contra el coronavirus?
Iberdrola ha dado prueba de ello. La eléctrica ha sido la primera empresa española que se ha atrevido a salir al mercado de deuda en medio de la tormenta desatada por el coronavirus y lo ha hecho con una emisión de bonos verdes. Ha logrado una demanda de 6.000 millones de euros para un objetivo de colocación de 750 millones.
In Italian
ANSA, Coronavirus: Bicciato, green health bond per ricostruire
Italian “Forum per la Finanze Sostenible” called for an issuance of a sovereign green health bond that will finance environmental and health investments in the country.
Le emissioni globali di green bond hanno raggiunto 257 miliardi di dollari, nel 2019, dei quali 116 in Europa e solo 10 in Italia, secondo i dati della Climate Bonds Initiative. (…) In questo contesto, l'emissione di green health bond per "l'Italia potrebbe raccogliere un volume di risorse sufficiente a iniziare a fare cose interessanti a livello infrastrutturale", osserva Bicciato, a partire dalla mobilità sostenibile, per evitare il caos quando finirà il blocco alla circolazione.
CBI NEWS
ASEAN State of the Market report
Earlier this month, we have published ASAN Green Finance State of the Market report that showed that issuance of green debt in Southeast Asia doubled between 2018 and 2019. Read more.
Bonds & Loans, ASEAN Green Bond Issuance Jumped 50% in 2019
Across ASEAN, 2019 was a big year for green bonds with issuance rising over 50% to reach a total of USD258bn, according to a report from HSBC and the Climate Bonds Initiative (CBI). But clear disparities remain between countries, with Singapore increasingly dominating the issuance pipeline.
The Business Times Singapore, Asean green bond issuance doubles to US$7.8b in 2019
The volume of green bonds and loans issued in Asean almost doubled between 2018 and 2019, in tandem with global trends, according to a report by Climate Bonds Initiative (CBI) on Thursday.
The Straits Times, Green debt issued in region doubles to $11 billion last year, Sue-Ann Tan
Mr Sean Kidney, chief executive of the Climate Bonds Initiative, said: (…) "The report clearly reflects that platforms now exist (for) green infrastructure, economic development and national growth paths across the region.”
Expert Investor, Asean green debt issuance hits $8.1bn in 2019, Elena Johansson
“This is Asia’s century, without a doubt,” said Sean Kidney, chief executive of Climate Bonds Initiative. (…) His comments stem from a report which found that green debt issuance has almost doubled in the Asean region, reaching $8.1bn (€7.45bn) in 2019 from $4.1bn in 2018, with Singapore taking the lead among the nations.
Green Bond Pricing in the Primary Market: H2 2019
At the end of March, CBI released the 9th iteration of the report “Green Bond Pricing in the Primary Market”. The report showed that green bonds issued in the second half of 2019 achieved better pricing than their vanilla equivalents. Read more.
Environmental Finance, Growing evidence of greenium for green bonds, says CBI, Ahren Lester
Investor demand helped to strengthen pricing for green bonds, according to the report – both euro and US dollar green issues saw their spreads tighten more than their conventional vanilla peers. For euro issues, the spread tightened 13.3 basis points (bp) for green issues during pricing, compared with 12.9bps tightening for their vanilla equivalents. In US dollar, the green spread tightened 13.7bps, compared with 11bps for the vanilla equivalents.
Environmental Finance, Sovereign green bond pricing strong amid demand, says CBI
There was an emphasis on sovereign green issuance in the report.
A handful of sovereign green bonds have attracted a 'greenium', research by the Climate Bonds Initiative (CBI) has found.
Markets Media, “Greenium” Emerging In Green Bond Market, Shanny Basar
Sean Kidney, chief executive of the Climate Bonds Initiative, said in a statement: “The report notes greenium emerging in some issuance and continuing strong investor demand for green sovereigns. These two factors should help shape market & investor directions and encourage a strong green component in stimulus programs.”
S&P Global Market Intelligence, Green bonds suffer setback amid market rout but long-term demand to stay strong, Jennifer Laidlaw, Mohammad Taqi
In a report on green bond pricing in the second half of 2019, the CBI found that seven of 19 issuances it analyzed priced with a "greenium," indicating that they yielded less than existing debt, while three others priced with no new issue premium.
Green Bond Treasurer Survey
In March, CBI released first of its kind survey-report: 86 treasurers from 34 countries were interviewed to provide unique insight into their green bond market experience. Read more.
Markets Media, Demand for green bonds exceeds vanilla equivalents, Shanny Basar
The non-profit organisation’s first Green Bond Treasurer Survey had 86 respondents from 34 countries representing nearly half, 44%, of the identified green bond universe.
Politico, End of the road for fossil fuel subsidies
Eighty-six treasurers from organizations issuing green bonds describe their experiences in a survey by Climate Bonds Initiative.
InFinance, CBI releases Green Bond Treasurer Survey Report
The survey suggests that issuers identify multiple benefits from green bonds, with visibility, a larger investment base, stakeholder engagement and catalysing new business highlighted as the main factors.
Global Trading, Demand for green bonds exceeds vanilla equivalents
The majority, 70%, of respondents said the demand for their green bonds was higher than for vanilla equivalents while nearly half, 42%, said green bond costs were lower.
MondoVisione, CBI Green Bond Treasurer Survey report out now
Respondent organisations represented around 44% of the identified green bond universe and had collectively issued 686 green bonds.
PaperJam, Les émetteurs de «green bonds» convaincus de leur choix, Jean-Michel Lalieu
Une étude menée par la Climate Bonds Initiative auprès de trésoriers démontre l’intérêt des obligations vertes. Elles agissent positivement sur la réputation et renforcent la base d’investisseurs.
Low Carbon Shipping criteria
Shipping criteria under the Climate Bond Standard are now open for public consultation. Read more.
Sea News, Climate Bonds Releases Draft Shipping Criteria for Public Consultation, Sue Terpilowski
Developed by a Technical Working Group (TWG) and overseen by an Industry Working Group (IWG) the Shipping Criteria provide a science-based assessment process on the low carbon and climate resilient credentials of ships.
splash247.com, Climate Bonds Initiative turns to shipping, Sam Chambers
Draft criteria highlights include no dedicated fossil fuel carrying vessels.
Bunkerspot, Global: Climate Bonds Initiative explains draft criteria for shipping sector, Lesley Bankes-Hughes
Climate Bonds Initiative CEO Sean Kidney said that the world’s supply chain is engaged ‘in a race against a catastrophic change of 4 to 5-degrees global warming’. ‘Shipping is part of that inoculation against climate change,’ he said.
Ship&Bunker, Climate Bonds Initiative sets out shipping stall
A technical working group has been developing criteria for the Climate Bonds Initiative since early last year. The consultation period for the criteria runs from now until the end of June.
MARKET
Bonds & Loans, Sustainability Has Never Been More Influential on Capital Deployment
Middle-East-focused analysis of the GB market developments.
Estimates from the Climate Bonds Initiative, a London-based non-profit that that also maintains the ‘gold standard’ for green bond certification, estimates global green bond issuance to exceed USD350bn in 2020, with more than USD50bn of supply coming from emerging markets.
China Dialogue, Why Chinese asset owners should act on climate.
Author stresses the role of asset owners, that “sit at the top of the investment value chain” in steering the course of economy towards low-carbon investments.
Last month, the overseas asset management arm of Ping An Insurance Group became the first Asian institutional investor to partner with the Climate Bonds Initiative, a UK-based advocate for green bonds.
GreenBiz, Look for the green bond label, Shitiz Chaudhary
Broad overview of the green bonds market.
The Climate Bonds Standard and Certification Scheme run by the nonprofit Climate Bonds Initiative (CBI) is an international certification scheme for green bonds. The initiative provides 12 sectoral criteria ranging from forestry and agriculture to renewables and low-carbon buildings.
Water Power Magazine, Hydropower over the next decade
Views of the industry members on what next decade may hold for hydropower development across the globe.
The International Hydropower Association (IHA) is currently working with the Climate Bonds Initiative (CBI) on green bond financing. (…) Some issuers have excluded proceeds from green bonds to finance hydropower projects due to a lack of clarity over appropriate sustainability standards. To solve this problem, IHA is working with partners as a part of CBI’s Hydropower Technical Working Group to agree eligibility criteria for green bonds to fund hydropower projects (…).
Rinnovabili, Investimenti verdi: tra incertezze e opportunità
Author focuses primarily on 2019 developments in the green bonds market.
(…) secondo i rapporti di Moody’s e Climate Bonds Initiative, si prevede una crescita del 24-55% del valore delle emissioni verdi nel 2020.
