(Apologies for the double post. This is the correct one)
1. The total size of the global debt securities market is (drum roll): $78 trillion … not the previously reported $100 trillion
If you’re thinking that figure looks odd, you’re right, this is some $20 trillion less than last reported – but it’s just change in counting methodology, not some sort of calamitous drop in the bond market.
Brookfield Renewable Energy last Friday issued that C$450m, 17 year, BBB bond for its 166 MW Comber Wind farm in Essex County, Ontario that we foreshadowed recently. The bond was, according to Brookfield, Canada's "first broadly marketed and rated wind bond".
As reported yesterday, the Export-Import Bank of Korea (Kexim) has issued its first “green” or climate friendly bond - $500m in size, 5 year tenor, coupon 1.75%. This is the first benchmark-sized bond marketed as a green bond outside the multi-lateral development banks. A big step forward and a big contribution from Korea, the standard-bearer of Green Growth Government.
Demand was strong: they had $1.8bn of orders from 100 investors for their $500m; which means, other potential issuers take note, they left some hungry investors out there.
Books have just opened. Joint lead managers are SEB and Bank of America Merrill Lynch.
This will mark the first climate bond out of Korea, coming out at a solid size and rating. The Korean Import-Export Bank has an AA3/A+ investment grade rating. We understand the bond is benchmark size (USD$500 million or larger) but we won't have details about actual issuance or pricing until books close.
> Canada's BMO Capital is, according to this story, predicting C$772-million of renewable energy project finance bonds from the country in 2013. For example, expect to see a new 17yr wind bond from Brookfield / Comber Wind. DBRS have already rated it BBB.
> IFC $1bn Green Bond snippets:
1. Within an hour of opening, books were oversubscribed; the deal closed 3 hours later, by now heavily oversubscribed.
2. There were 56 buyers:
The IFC has just issued (books closed a couple of hours ago) a USD1 billion, 3 year, AAA "Green Bond" tied to climate investments - yes, that's a climate bond in our parlance. Interest rate set at 3 year US Treasuries +15 basis points. If you want to see just how low interest rates are for US Treasury bonds see this Wall Street Journal story. Low low low.
+ The UK's £4.6bn Lancashire County Pension Fund has invested in a 23.5 year, £12m ($18m) solar bond, issued by a community-owned solar power plant in Oxfordshire. According to I&PE, the bond gives Lancashire a return "3 percentage points above the retail prices index". Westmill Solar Coop's 21,000-panel solar farm can generate 4.5m kWh a year - enough for 1,400 homes.
“There is more liquidity than ever being put into the system, but funds are still not being allocated to renewable energy projects”
“The bottleneck for renewable energy is not in construction financing but a year or two after construction [re-financing].”
“[Renewable Energy] is not an asset class where risk changes over time – it changes [only] between pre-completion to post-completion stages… it is incorrect to think that offloading an asset post-completion dumps risk onto others because the riskier part of the project is past.”
“Alignment of interest with investors is strong as the issuing bank retains the credit risk in Covered Bonds.”
Canadian ratings agency DBRS announced on Thursday that it had just rated as BBB a bond to be released by Canada's Brookfield Renewable Energy. The 17 year, C$454m, wind bond will allow Brookfield to re-finance its 165.6 MW Comber wind project. The project was completed in November 2011.
Governor Andrew Cuomo announced a new Green bank in his annual 'State of the State' address yesterday. He said the bank would focus on leveraging private sector capital for clean energy.
This is an excellent development. As we've argued since our inception, special purpose State financial institutions will play important enabling roles in leveraging private investment for public policy purposes.
