What’s happening in the Green Bond Market?
September was a busy month for Green Bonds with notable issuance from the EIB, SocGen and MuniFin to name but a few. SocGen state that the proceeds will be used to fund new renewable energy projects in order to contribute to the fight against climate change and MuniFin are planning to Issue a Green Bond every 18 to 24 months. Munifin’s USD500m Green Bond was sold on September 27 and the book was oversubscribed by the afternoon.
Already in October we've witnessed Rabobank and TenneT both completing EUR500m transactions as demand for Green Bonds marches on. Rabobanks Green Bond was 4 times oversubscribed with Books closing at just over EUR2bn. Also, the City of Honolulu sold its very first Green Bond to raise funds for its Waste Energy Recovery program. TenneT is the largest Corporate Issuer of Green Debt in the Netherlands and their note printed this week has a maturity of 17 years, making it one of the longest Green Bonds created. It almost challenges EIB's groundbreaking trade, which was priced at the end of September. With this transaction, EIB continues to spur the sustainable growth of the Green Bond market, by giving long-term investors the opportunity to own a 21-year Green Bond in EUR for the first time. This note enhances EIB’s EUR Green Bond curve, complementing its existing 3, 7 and 10-year lines. Eila Kreivi, Director and Head of Capital Markets Department at the EIB, said: “The response of long-end investors has been very strong despite the current low level of yields and spreads. This is a testimony to the value that EIB’s trustworthiness and detailed reporting have for impact investors. KPMG’s Independent Reasonable Assurance Report adds to the reliability with which these investors can look at the comprehensive information we are able to provide.”
What does the future hold?
Mark Carney, governor of the Bank of England, recently said that green bond issuance could double from last year. He mentioned international collaboration is needed to facilitate cross-border investment in green bonds. “For investors, green bond markets offer a stable, rated and liquid investment with long duration,” Carney added. “For issuers, green bonds are a way to tap the huge USD100 trillion pool of patient private capital managed by global institutional fixed income investors. The shift to the capital markets from banks will also free up limited bank balance sheet capacity for early-stage project financing and other important infrastructure lending.”
Green Bond Funding for the near future will likely gather pace and there is anticipation for the Middle East’s First Green Bond. A number of environmental sustainability programmes are being rolled out through the GCC region and as these projects discuss funding options, Green Bonds are likely to be favoured.
Learn more about Green Bond Issuance and discover specific Trade details using the CMD Portal Data Sheet and Instrument Search. Remember to tick the Green Bond box!