In Cologne yesterday the International Emissions Trading Association (IETA) released a discussion paper proposing a new international scheme of green bonds linked to carbon credits.
The scheme would involve emerging nations issuing green bonds for projects that combine economic development and emissions reduction objectives.
The bonds would be backed by rich countries wanting to support climate change mitigation. Funds would be linked to emission reductions by being ring-fenced or asset-backed.
AXA Investment Managers (AXA IM) is one of the biggest asset managers in the world. At the end of 2009 AXA IM had EUR 328 billion of fixed income assets under management.
In a paper published this week, Christopher Iggo, AXA Investment Managers' CIO Global Fixed Income, said:
The formal coalition agreement between the UK Conservative and Liberal-Democrats, released today, lists two key initiatives that have been part of Climate Bonds Initiative proposals:
- The creation of a green investment bank.- The provision of home energy improvement paid for by the savings from lower energy bills.
Also in the agreement is the provision of a floor price for carbon, something investors have been calling for.
All three are important and necessary changes relevant to governments everywhere.
1. IFC on their US$200 mil of Green Bonds2. Climate bond tipping points and issue volumes3. Climate Bonds Standards4. Transition to a low carbon economy: what is missing?5. Green investment banks6. New Climate Bonds Initiative Advisory Panel members
1. IFC issues US$200 mil of Green Bonds
Our guest for the evening, Shilpa Patel, Climate Change Chief at the International Finance Corporation (IFC), told us that the IFC had just issued a $200 million Green Bond; it's a regular IFC bond but proceeds are ring-fenced and only applied to climate-friendly investments. The bond is a test; if the market is receptive, as it looks like it will be, expect a lot more Green Bonds.
Hard in the heels of the IFC’s US$200 million Green Bond last month, comes the AAA-rated European Investment Bank (EIB) with a third issue of its “Climate Awareness Bonds”.
Denominated in Australian dollars and South African Rand, yesterday’s issue is for the equivalent of €300 million. They will be sold largely to Japanese retail and institutional investors.
Bond proceeds will be ring-fenced for the EIB’s renewable energy and energy efficiency lending programs. Lead manager is Daiwa Securities.
The International Finance Corporation (IFC) today launched a US$200 million AAA Green Bond offering, ring-fenced to fund IFC climate change related programs.
The bond follows the footsteps of its sister institution, the World Bank. The World Bank has raised over $1 billion in Green Bonds in recet years.
Settlement date for the IFC bond is 26 April; they may get to $250 mil by then. SEB are the lead manager - they're becoming quite a green bond specialist.
This issue is really a market test for the IFC. If the issue is over-subscribed expect more later in the year.
The London-based Climate Bonds Initiative today announced that Graciela Chichilnisky, Professor of Mathematics and Economics and Columbia University in New York, would be joining their international Advisory Panel.
Prof Chichilnisky was the architect of the Kyoto Protocol carbon market, is author of the recent book "Saving Kyoto", advises several UN organizations and is working with the US Air Force on pioneering a new approach for measuring, anticipating and managing catastrophic risks, sometimes called "Black Swans".
Now the Asian Development Bank (ADB) is getting with the "themed" bonds rhythm: they're marketing Water Bonds to finance its work in the AsiaPac water sector. Daiwa Securities is lead manager; bonds will be issued in Australian dollars and South African rand.
While bond finance for water infrastructure is commonly sought in developed countries, it's rare in emerging nations.
Two news items of note:1.
Energy Policy is perhaps the most authoritative international academic journal on energy policy. It has just published a short piece on climate bonds.
