The month was kicked off with a bond from a new issuer to this space - the Dutch development bank FMO (Financierings-Maatschappij voor Ontwikkelingslanden). They issued a EUR500m “Sustainability” Bond to support the financing of ‘green and inclusive finance projects’. This includes renewable energy, energy efficiency, responsible agriculture, food production, transport, waste supply and access as well as microfinance. So pretty broad then.
It’s been a crazy month for “labelled”* green bonds. At the beginning of the month, there was approximately $10bn outstanding (just under $13bn has been issued but some matured) consisting of mostly of AAA multi-lateral development banks and (depending on how you count) a few municipalities.
Now, as November closes, we’re looking at approximately $15bn outstanding with the first few corporate issuances released! One month on and it’s a different world. Here is a brief summary:
A successfully placed 19 year, £305.14 million ($496m) bond to fund the acquisition of a large offshore wind energy transmission connection shows how the EIB’s Project Bond Credit Enhancement Initiative can make a real difference.
Climate Policy Initiative has launched a useful Climate Finance Landscape web site.
Key finding: climate investment plateaued at $359 billion in 2012, far short of the need. In contrast, the IEA projects that an additional investment of $5 trillion (above business as usual) is required between now and 2020 for clean energy alone, to limit warming to 2°C. Work to do.
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Some useful facts from a cracker of a presentation by IEA's Philippe Benoit:
For most of the past fortnight I've been in Warsaw, more talking 'private sector climate finance' than UN climate agreement, despite the negotiations being the ostensible reason for the gathering of very many nations. From my perspective there are so many key people around that you can do a year's worth of meetings in one burst; very efficient. Of course negotiations were underway all over the place, if you can call arguing for days about a sentence a "negotiation" - all a damp squib really. Memories:
NRW Bank, the development bank of the German State of North Rhine-Westphalia, has just issued a EUR250 million, 4 year bond, the proceeds of which will go to refinancing environmentally friendly water and energy projects in the State.
Interest rate is 0.75%. Bond ratings were: Moody's Aa1 (Neg) / S&P AA- (Stab) / Fitch AAA (Stab). Joint bookrunners were Crédit Agricole CIB and DZ Bank.
Investor type:
Regional spread:
Electricité de France (EDF) today set a new high for a green bond - a benchmark-sized EUR1.4 billion (nearly $1.9bn). A terrific achievement.
The bond was two times over-subscribed - so I guess that's another EUR1.4bn that's still looking for a green home.
Ratings are A+ S&P / Aa3 Moody’s / A+ Fitch. The bonds are tied to EDF's renewable energy assets - which makes them a climate bond in our eyes.
The UK Government announced today they will join the US and Scandinavian countries in agreeing to end support for public financing of new coal-fired power plants overseas, except in "rare circumstances in which the poorest countries have no feasible alternative".
Speaking in London today, Mark said: "Green securitization is an enormously important area we need to address if we're to successfully scale up finance to tackle climate change."
“The securitization of loan portfolios for renewables, energy efficiency loans and smaller scale climate debt opens up the opportunity to more quickly recycle bank capital - and equity - and so support more projects. Importantly , if investment grade, institutional investors can add these products to their mainstream bond portfolios”
FinanceAsia reports that Chinese renewable energy generation company GCL-Poly has privately placed a USD200 million, 0.75%, 5 year convertible bond with PAG Investments.
GCL-Poly, also the largest supplier in China of polysilicon for solar cells, is 20% owned by Chinese sovereign wealth fund CIC.
