Air Liquide has issued a new €500 million green bond to finance or refinance flagship energy transition and sustainable projects. The projects will particularly focus on low-carbon hydrogen, carbon capture, and low-carbon air gases. Furthermore, the company has raised this bond with a maturity period of 10 years at a yield of 3.466 per cent. The bond is issued under the company’s Euro Medium Term Note (EMTN) programme.
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Hong Kong continues to strengthen its presence as the green and sustainable finance (GSF) hub for the region, building on its established status as an international financial centre. However, in 2022, Hong Kong’s labelled green bonds dropped 49% YoY to USD7.0bn. Climate Bonds identified USD3.4bn worth of Hong Kong green bonds aligned with the Climate Bonds definition in 2022, a 65% decline YOY.
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According to the report, all bond labels, including green, social, and sustainability, sustainability-linked and transition bonds (GSS+) offer pricing benefits compared to vanilla equivalents. The analysis – sampling bonds priced in the choppy market period of H2 2022- also revealed green bonds have a strong following of investors which helped get deals over the line in in a faltering fixed income landscape last year.
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Currently, the green bond market is mainly organised through market-based and industry group standards. While these voluntary standards provided a basis for the development of the green bond market, the European Commission aims to provide issuers and investors with a more extensive and uniform regulatory framework with the introduction of a European green bond standard.
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By shedding more light on reporting practices, the aim is to understand the availability and attributes of disclosure on the use of proceeds (UoP) and environmental impacts/benefits of the projects, assets and activities financed by green bonds. This can identify avenues for improvement and spur more informed discussions among various market participants.
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Today, there are several investors that have dedicated funds to invest in green bonds, and the Indian government intends to heighten the participation of international investors in the domestic bond market. It is expected that the government’s green bonds will set a precedent and are likely to open up the local market further. The issuance will be part of the government’s overall market borrowing of Rs 14.95 trillion in 2022-23, though the issue size for the green bonds has not been specified yet.
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ReNew Energy Global, an Indian renewable energy developer, announced that its wholly-owned subsidiary, India Clean Energy Holdings, raised $400 million by issuing senior secured dollar notes at a rate of 4.5 per cent. The dollar notes have been recognised as green bonds by the Climate Bonds Initiative. Also, the bonds will be listed on the Singapore Exchange. The tenor of the green bonds is 5.25 years.
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China has pledged to be carbon neutral by 2060. It’s a huge ambition and will require a vast amount of domestic and international investment. China’s statement that it will be carbon neutral by 2060 will require an estimated US$21 trillion in investment, according to research from Tsinghua University in Beijing. The Chinese green bond market is the second largest market outside of the US in terms of issue size and capacity.
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China has, for the last 6 years, been one of the world’s largest green bond markets and yet, the market in 2020 was bumpy. Total Chinese green bond issuance in the domestic and overseas market reached USD44bn (RMB289.5bn), representing a 21% decrease from the USD55.8bn (RMB386bn) achieved in 2019.
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Green Bond Pricing in the Primary Market H1 2021 is the 12th iteration in the series by Climate Bonds Initiative and monitors the performance of 56 EUR and 19 USD denominated benchmark size green bonds with a total value of USD75.9bn issued between January and June 2021. The report includes 75 green bonds with a combined face value of USD75.9bn.
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Walmart has completed its previously announced $2 billion inaugural green bond issuance. The green bond is Walmart’s first issuance under the company’s Green Financing Framework, which was announced in August 2021. It explains the company’s alignment with the International Capital Markets Association’s 2021 Green Bond Principles.
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The green and blue bond program enables the Asian Development Bank (ADB) to support its developing member countries seeking to deliver environmentally sustainable growth to help reduce poverty and improve the quality of life of their people. Both green bonds and blue bonds would include investments such as construction of new assets, as well as maintenance, enhancement, improvement or repair of existing assets. Green bond- and blue bond-eligible projects would exclude lending to financial intermediaries.
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The International Finance Corporation (IFC) will invest $100 million towards Egypt’s first private sector green bond. This investment will aid in the mobilization of funds for climate-smart initiatives, the reduction of greenhouse gas emissions, and the country’s transition to a greener economy.
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KEPCO and other companies that have decided to pursue a greener business model should be working hard to demonstrate to the market that they are taking the right steps to align with ESG investors. At this stage, however, it is unclear whether KEPCO has the appetite to seriously transition into a world-class renewable power company and catch up to its ambitions.
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Egypt’s Ministry of Finance successfully issued the first public sovereign green bond offering in the Middle East and North Africa, at a value of $750 million for five years, exceeding the government’s expectations of $500 million. The bonds are important to finance the country’s expenditures related to green projects as part of the Egypt Vision 2030, which gives priority to green investments.
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The Chinese green bond market is in a clear upward trajectory expected to continue in the years ahead. However, there are opportunities for policymakers and investors to increase the rate of growth.
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