Climate Bonds Blog

I know it's not fashionable in these post-crisis days, but have you ever thought of all the individual time and effort that gets saved when you replace a hodge-podge collection of bitsy currency rates with one? About the huge risk management - and paperwork - load it would from business as international trade flows grow as a percentage of the world economy?

As eminent Harvard economist, Professor Richard Cooper says, "by eliminating monetary and exchange rates as sources of asymmetric shocks among participating countries, a common currency will conduce to more stable economic activity ...."

The European Investment Bank has been busy. A fortnight ago they "tapped" (see our recent post for what that means) their 2013 six year Climate Awareness Bond for another EUR250 million. Underwriter was Deutsche Bank.

Then last week they tapped their 4 year South African Rand (ZAR) Climate Awareness Bond for another ZAR 250m (EUR 17 million), bringing the total for the bond up to ZAR 1 billion (EUR 67 million). Lead managers were Citi and Morgan Stanley.

German Index company Solactive last week launched a green bonds index, the first to hit the market. The Index uses the Climate Bonds Initiative's tracking list of green bonds as a base.

To be included in the Index, bonds need to have an amount outstanding of at least US$100 million and a minimum remaining time to maturity of 6 months. Convertible bonds and inflation-linked bonds are excluded. All bonds are weighted according to their market value with a maximum of 5% per bond.

Vasakronan is a major property owner in Sweden, working hard to green their portfolio. This is their second green bond; we covered the first last November.

The bond was issued in two parts, the first SEK350 million at 2.473% interest, the second SEK650 million at a variable (floating note) rate of 67 basis points above 5 year Swedish Treasury bond rates (mid-swaps).

This is a corporate bond with proceeds earmarked for green assets.