Climate Bonds Blog

Posted: Nov 20, 2013

According to the Financial Times yesterday, Zurich Insurance has decided to invest up to $1 billion into green bonds that finance projects aimed at mitigating climate change and climate change adaptation.

Cecilia Reyes, chief investment officer at Zurich, which manages more than $200bn of total assets, said the company wanted "to improve liquidity in the $11bn green-bond market, stimulate interest from other investors and encourage new issuers". Good on them.

Zurich Insurance allocates $1bn to green bond investing; mandate goes to BlackRock
Posted: Nov 20, 2013

Bank of America raised $500 million in the first sale by a US bank issuer of green bonds. Expect this to be a dam-breaker - now we just need to make sure the myriad banks and corporates that will surely follow comply with robust standards and that green credentials are reviewed by qualified third party actors.

 

The interest rate was 1.35 percent, 80 basis points more than US Treasury bonds of a similar nature. Bloomberg report that the bond is likely to be rated Baa2 by Moody’s.

Bank of America closes their own 3yr, Baa2, $500m green bond - a US first
Posted: Nov 20, 2013

Vasakronan is a Swedish property company with investments in Stockholm, Uppsala, Gothenburg, Malmö and Lund. They've just issued a SEK 1.3 billion Green Bond, with the proceeds going to finance upgrades of some existing buildings and new building construction to LEED Gold or better, or BREAM certification. Vasakronan properties have an energy consumption which is apparently 47% below average.

Swedish property group Vasakronan issues SEK1.3bn ($197m) Green Bond - theme goes corporate
Posted: Nov 16, 2013

For those non-bankers among you, over-subscription means getting more orders than you can fill - in the case of most climate and green bonds this year, way more.

Kommunalbanken (KBN) had USD840 million of orders from over 40 investors, 58% of which were "socially responsible investment (SRI) portfolios". Given the number of times central banks appearing on green bond buyer lists (see below), everyone's turning into an SRI buyer nowadays. And that's the way it should be.

Yet another over-subscription as Norway's Kommunalbanken closes its USD500m AAA 3yr green bond @0.75%. With demand this strong and rates this low, perhaps we can get on with rebuilding the world's infrastructure?
Posted: Nov 16, 2013

Last week we blogged that SolarCity and Credit Suisse were about to issue a new $54.4 million, climate bond – a rooftop solar lease securitization. It’s out: BBB+, 4.8%, 13 years. The long tenor is interesting – and great. And S&P’s BBB+ rating suggest those credit analysts may be beginning to understand solar.

This bond has been long-awaited by the green finance sector, who are hoping it’s the harbinger of things to come.

This week’s $54.4m, BBB+, 13yr solar rooftop lease securitization bond was a ground-breaking success
Posted: Nov 14, 2013

I've just arrived in Warsaw for a round of climate finance meetings and talks alongside this year's UN Climate Negotiations (COP19); I'll be reporting. But the first thing I have to report is not about the Conference, but about the Host: the Polish Government.

The Host Government is meant to lead the negotiations. But unfortunately Poland would seem to be doing exactly the reverse. Apart from what's going on inside the negotiations (and remember Poland has been blocking tightening of the EU's emission targets), contemplate these:

COP19 letter #1: Oh that Crazy Polish Government!
Posted: Nov 12, 2013

There has been a bit of interest recently about rapidly expanding options for retail investors to get involved in renewable energy projects. While we still see retail bonds as making a relatively modest contribution to the transition to a low carbon economy, they are important in engaging the public and creating awareness for green thematic investments which can only be good.

Here’s a round up of some of the activity going on in the retail bond market (please note, this is not an endorsement of and product’s credit characteristics, only their environmental ones)...

Good Energy bond 3x oversubscribed

Small bonds roundup... Good Energy 3x oversubscribed, mini-solar bonds, EU+US crowd funding – retail investors want in!
Posted: Nov 12, 2013

Electricité de France (EDF) is planning a Euro bond linked to their renewable energy assets. They’ve mandated Morgan Stanley and Credit Agricole CIB to arrange a series of  investor meetings in Europe over the coming week. No word yet on size. EDF is rated A+/Aa3/A+ (Stable/Neg/Neg) by S&P/Moody's/Fitch.

It seems that EDF have been convinced that self-certification will not fly (hallelujiah), so project eligibility and selection criteria has been reviewed by ESG analysts Vigeo, who did the big Air Liquide bond. Tracking and reporting of disbursements will also be audited by an independent third party – a good development.

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Morgan Stanley & Credit Ag shopping proposed EDF green bond this week / EIB issues 4yr ZAR500m ($48m) climate bond
Posted: Nov 11, 2013

US firm SolarCity announced last week that it was seeking to make a private placement of a $54.4 million, 13 year bond backed by cash flows from rooftop solar leases. SolarCity is the second-largest U.S. solar company by market capitalization.

SolarCity rooftop solar lease securitization nears fruition / If you're in Warsaw @COP19 come and hear me speak at 3 side-events
Posted: Nov 10, 2013

Earlier this week we blogged the issuance of IFC's second $1 billion green bond. IFC's press release about the bond says it "was heavily over-subscribed". IFC vice president and treasurer Jingdong Hua told Environmental Finance. “We had a pretty large book – well over $1.5 billion – and we were able to tighten the pricing. Demand remains strong.”

Buyer details for IFC $1bn + FMO EUR500m: over-subscription, central banks, and more / Just to remind us why we're doing this, WMO says GHG levels reach a high point