After a quiet August, green bonds issuance in September went through the roof – there have been 17 green bonds issued taking the total issuance amount year to date to US$28.86bn (see green bonds graph on our home page for details).
Media interest matched momentum. There was discussion about growth prospects, whether the market was really contributing, and about whether standards were needed. Let us know if we missed a story and we’ll try and include it next month.
Canada’s Province of Ontario has just issued the first CAD-denominated green muni bond, in what they have indicated will be an ongoing program. The semi-annual coupon is 1.75% with 4 year tenor. Moody’s have rated the bond Aa2e; DBRS AAALe. Underwriters were Bank of America Merrill Lynch, CIBC, HSBC and RBC Capital Markets.
The indicative pricing for the bond was set around CAN 1.25% 1Sep18+38.5bps. It ended up closing 0.5bp tighter than initial price guidance, at +38bps versus the benchmark Canada bond.
Investor demand was strong, with CAD 2.4bn of orders. Yes, that's 2.4bn of orders for a 500m bond. Call that "investor demand".
Swedish real estate services company Fastighets AB Förvaltaren, owned by the municipality of Sundbyberg in Stockholm, issued its first green bond late last week. Förvaltaren have only recently re-entered the bond market after a 20 year gap with a new bond since in the spring this year (SEK350m) - and just a few months later they are issuing green bonds!
By Beate Sonerud, Climate Bonds Policy Analyst
This post marks the beginning of a series of “under the hood” blogs where we will do deep dives into issues we see in the green bond market.
China’s Trina Solar is issuing US$100m of convertible bonds with 5-year tenor and 4% annual coupon, with semi-annual payments. An extra US$15m could be raised, as Trina has given the underwriters a 1-month window to buy additional bonds.
We are generally a proponent of “vanilla bonds”: simple bond structures that can most easily fit into institutional investor portfolios.
The world of retail bonds can be different; in fact it can look like a whole different planet with interest rate complexity seen as a selling point rather than a barrier.
(For you poor non-Norwegian readers, we publish in norsk to celebrate that this is the first corporate green bond as well as largest green bond in Norway, and the first hydro-only green bond in the world.)
Av Beate Sonerud, Climate Bonds Initiative policy analyst
I've been in Montreal today discussing the prospects for green property bonds and arguing it's as much about re-financing as new projects. We want an owner of a green hotel chain to be able to issue green bonds (and hopefully expand the chain) as much as an owner doing a new retrofit.
Yesterday, The Nordic Investment Bank (NIB) issued their 6th (and largest!), green bond, to date: The USD 500mn, AAA-rated bond, with 7-year maturity and 2.25% coupon, was more than 1.6x oversubscribed, according to the bank’s press release. Joint book runners were BofA Merrill Lynch, Crédit Agricole CIB and SEB.
BKK, a Norwegian power company based in Bergen, yesterday closed Norway’s first corporate green bond. It overtakes IBRD’s NOK 400m bond as the largest green issuance in Norwegian Krone.
