Climate Bonds Blog

Green Shoots of Recovery in the Securitisation Markets?

Posted: May 16, 2012

Across Europe and a number of other regions bank recapitalisation pressures have led to a reduction in business and project lending - and thus reduced renewable energy lending.

This is a problem because the bulk of project finance (95% globally) comes from bank lending.

The development of a market for securitized renewable energy and energy efficiency assets and loans, allowing banks to quickly recycle limited loan capital, is going to be vital to ensuring banks deliver the project finance needed as we “green” energy systems.

This guest report by guest contributor Tadhg Molony explores the current state of the securitization market and its prospects going forward.

Green Shoots of Recovery in the Securitisation Markets?

Quarterly Corporate Bond Market Update

Posted: May 15, 2012

By guest blogger “Corporate Bonder”

Market Overview

Data compiled by the Bank for International Settlements[1] indicate that the total size of the global debt securities market (domestic and international[2]) was $98.7 trillion as at September 2011, of which $89.9 trillion were notes and bonds. Governments accounted for $44.6 trillion of outstanding debt securities, financial organizations $41.9 trillion, corporations $11.2 trillion and international organizations $1.0 trillion.

Quarterly Corporate Bond Market Update

Painful truth from Jeffrey Sachs / Mongolia to Japan grid will halve Japanese energy prices / China $284m wind bond / MIGA needs a push / IEA supports climate bonds / Korea shoots for 2% of GDP going into green growth

Posted: May 11, 2012

> In Korea, in the centre of dynamic Seoul, Jeffrey Sachs has just spelt out the painful truth in his speech to the Global Green Growth Summit:

“We are in deep trouble. Things are not working to fix the biggest problem we’ve had to fix. We have failed to do what, 20 years ago, we set out to do. We have squandered that 20 years.

This is an issue where you can feel good about a demonstration project here and there; but the scale of the impact is overwhelming us all.

Every successful economy has fossil fuels in its DNA. It can be hard to appreciate the nature of the challenge before us. To change direction is to deeply change the hardwiring of our economies.

IFC does $500m green bond / Pennsylvania setting up national EE loan warehouse / Korea SWF becomes climate bonds buyer / SA green bond is 14 yrs / Reuters on need for RE bonds in EU

Posted: Apr 30, 2012

> The IFC on Friday issued a $500m Green Bond in the US market. Rated AAA, the three-year bonds was underwritten by JP Morgan. This is the first IFC green bond targeting US investors. All proceeds go to climate change related investments. Investors include BlackRock, TIAA-CREF, Climate Bond Standards Board member CalSTRS and the United Nations Joint Staff Pension Fund. The coupon is 0.5!

IFC does $500m green bond / Pennsylvania setting up national EE loan warehouse / Korea SWF becomes climate bonds buyer / SA green bond is 14 yrs / Reuters on need for RE bonds in EU

New EIB $148m Climate Bond / Climate Bond talks galore: London LSE 19 Apr; Oslo 2 May; NYC Env Bonds Conf 23 May; Toronto 25 May

Posted: Apr 18, 2012

> The European Investment Bank issued a 7 year, 3%, SEK1 billion ($148m) Climate Awareness Bond last week. Underwriters were SEB (Christopher Flensborg is at it again) and Deutsche Bank. Looks like Swedish funds continue to have appetite for climate and green bonds.

> Climate Bond talks are everywhere this Spring:

Nick Silver is running a private climate finance session at an LSE Grantham Institute seminar in London this week (19 Apr).

I'm is speaking in Oslo on 2 May at a half day seminar on Climate Bonds and Standards hosted by DNV.

New EIB $148m Climate Bond / Climate Bond talks galore: London LSE 19 Apr; Oslo 2 May; NYC Env Bonds Conf 23 May; Toronto 25 May

Sth Africa IDC issuing $700m green bond / WB does another $115m / China orders banks to assess enviro risks - Go China! / UK Chancellor urged to get serious / Enviro Bonds conf NYC 23 May: 25% off

Posted: Apr 8, 2012

> According to BusinessDay and Responsible Investor, South Africa’s state-owned Industrial Development Corporation is issuing a R5.2 billion green bond to finance clean energy projects. Expected return is 9%. R1bn of the bond was bought by the USD115bn South African Government Employees’ Pension Fund (GEPF).

Sth Africa IDC issuing $700m green bond / WB does another $115m / China orders banks to assess enviro risks - Go China! / UK Chancellor urged to get serious / Enviro Bonds conf NYC 23 May: 25% off

Bond news: IRS provokes roaring laughter w. Destiny Green Bond ruling / Nice model w. Morris C. distrib. solar / Fitch rates wind bond A-! / $50m Swedish wind bond / Alert: NYC Env Bonds Conf 25 May

Posted: Mar 26, 2012

>You have to hand it to the US IRS (Internal Revenue Service) – they seem to have a sense of humour.

In 2004, the US Congress created tax-credits for Green Bonds for large construction projects that would serve as demonstrations of alternative energy technologies. In 2007 Destiny USA issued $228m in Green Bonds under the program to finance a “green” expansion of a big shopping centre in Syracuse NY.

Bond news: IRS provokes roaring laughter w. Destiny Green Bond ruling / Nice model w. Morris C. distrib. solar / Fitch rates wind bond A-! / $50m Swedish wind bond / Alert: NYC Env Bonds Conf 25 May

4 snippets: IEA’s Birol says we need new Churchills (i.e. ain’t any around at the moment) / EU raises 4°C warming / corporate leaders have light bulb moments / Kidney@BloombergNEFSummit

Posted: Mar 21, 2012

1. The EU’s chief climate negotiator says the world is on track for around 4°C of global warming under current carbon emissions trends, a trajectory that some scientists say risks a planetary mass extinction event. Read the EurActiv story - http://goo.gl/yo8sn.

4 snippets: IEA’s Birol says we need new Churchills (i.e. ain’t any around at the moment) / EU raises 4°C warming / corporate leaders have light bulb moments / Kidney@BloombergNEFSummit

Just released in NYC: OECD global enviro health check - wake up call for investors

Posted: Mar 21, 2012

The OECD's new Environmental Outlook to 2050 – the equivalent of a planetary health check - is, frankly, deeply disturbing. It has special implications for institutional investors like pension funds, for whom sustainability of value creation is central to their fiduciary duty.

Just released in NYC: OECD global enviro health check - wake up call for investors

Buffet hedge bet comes out in favour of solar

Posted: Mar 11, 2012

Warren Buffet is a famous proponent of value investing and he surely received a sign of the value in solar investments over fossil fuels last week. The MidAmerican Energy $850m Topaz solar project bond we mentioned a couple of weeks ago was so successful that a second tranche is expected to cover the remaining debt of the project. The offer was oversubscribed by $400m which would have mopped up the total $1.2bn of debt in the project; Buffet is a shareholder in MidAmerican.

In contrast, Buffet's investment in $2bn of bonds from gas company Energy Future Holdings is taking a hit due to low gas prices in US. The market value of the investment is already at $878m with further write downs expected.

Buffet hedge bet comes out in favour of solar

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