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'Green Bond Pricing in the Primary Market'

Climate Bonds Initiative Releases Second Quarterly Report


LONDON - November 9, 2017 ( Newswire) Climate Bonds Initiative has released their second full paper "Green Bond Pricing in the Primary Market" report analysing the performance of green bonds at issue April-June 2017. The analysis is based on a total sample of 131 bonds, 19 of which are green bonds and 112 are vanilla bonds. More details on the methodology can be found in pages 13 -15 of the report.

The report is a continuation of our ongoing assessment of green bonds pricing.

A preliminary 'Snapshot' briefing paper examining Q4 of 2016 was produced for the 2017 Climate Bonds Annual Conference and the first Green Bond Pricing Report examining eligible green bonds from 2016 & Q1 of 2017 was released in August. investing ideas in renewable energy stocks

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Highlights from Quarter 2:

Detailed Findings:

The green bond market continues to expand, offering investors a broader choice of instruments, despite the limited presence of large corporate bonds to date. Green bonds afford issuers the opportunity to broaden their investor base while consolidating their commitment to investing in climate change solutions.

Peer Stein, Global Head of Climate Finance, Financial Institutions Group - IFC "Pricing advantages and investor diversification remain among the most talked about topics for green bonds. With this second publication in a joint series with the Climate Bonds Initiative, IFC is committed to contributing facts and greater transparency to this discussion."

Julie Fox Gorte, Ph.D, Senior Vice President for Sustainable Investing, Pax World "Pax welcomes this evaluation of the performance of green bonds by the Climate Bonds Initiative. It is nice to see that green bonds are in demand, as well as information on credit spreads and performance. All of it speaks to the market for green bonds continuing to be strong, and we're going to need that strength."

Sean Kidney CEO Climate Bonds

"Clear distinctions between green and vanilla bonds performance are still hard to pinpoint at this stage of market development, despite the anecdotal evidence emerging. The green bond space is still evolving and we expect that the dynamics may change as the market matures. Climate Bonds will continue its rigorous analysis of the market and the expansion of our data sample in future quarters."


Andrew Whiley,
Head of Communications and Media
Climate Bonds Initiative
+44 (0) 7914 159 838


The report was prepared jointly by the Climate Bonds Initiative and the International Finance Corporation (IFC) with support and funding from Pax World Mutual Funds, Obvion Hypotheken Bank, and Rabobank. Additional funding was received from the Ministry of Finance of Japan and the Government of the Kingdom of Denmark through the Ministry of Foreign Affairs.

About the Climate Bonds Initiative:

The Climate Bonds Initiative is an investor-focused not-for-profit, promoting large-scale investment in the low-carbon economy. More information on our website here.

About the International Finance Corporation (IFC):

IFC, a member of the World Bank Group is the largest global development institution focused exclusively on the private sector in developing countries.

IFC utilizes and leverages their products and services—as well as products and services of other institutions in the World Bank Group—to provide development solutions customized to meet clients' needs. The Institution applies its financial resources, technical expertise, global experience, and innovative thinking to help their partners overcome financial, operational, and political challenges. More information on the IFC's website here.

Report Methodology: This paper covers qualifying green bonds issued in the second quarter of 2017, and includes similar metrics to the earlier paper, plus a few enhancements. 101 labelled green bonds were issued during the second quarter of 2017, with a combined face value of USD30bn. This paper covers just under half of the total amount issued (USD14bn) during the quarter, made up of 19 USD and EUR bonds. The sample includes green bond issuers from both Developed and Emerging Market countries. The 19 bonds were chosen based on parameters designed to capture the most liquid portion of the market.

More details on "Green Bond Pricing in the Primary Market" Q2 2017: The report shows that green bonds are oversubscribed and spreads tighten during the book building process which is to be expected under current market conditions. Some green bonds priced inside their own curves, exhibiting a 'greenium', but some also priced on or outside their curves having the traditional new issue premium. Again, this is no different from the vanilla bond market.

Performance in the immediate secondary market was mixed, but based on the metrics we used, EUR corporate green bonds issued during Q2 2017 delivered superior tightening relative to both vanilla bonds issued during the same period, and corresponding indices. USD green bonds did not perform comparably.

Green bonds are the same as vanilla bonds in every way except that the use of proceeds is green. For this reason, they are as attractive to regular investors as they are to green investors, which will be critical for the growth of the market. Green bonds are sometimes sold at similar levels to vanilla bonds. Sometimes they perform better in the secondary market, and sometimes they don't. Our conclusions relate only to this data set.

Previous Pricing Reports: Green Bond Pricing in the Primary Market: Q4 2016 Snapshot can be found here.

Green Bond Pricing in the Primary Market: Jan 2016 - March 2017 can be found here.


The information contained in this communication does not constitute investment advice in any form and the Climate Bonds Initiative is not an investment adviser. Any reference to a financial organisation or debt instrument or investment product is for information purposes only. Links to external websites are for information purposes only. The Climate Bonds Initiative accepts no responsibility for content on external websites.

The Climate Bonds Initiative is not endorsing, recommending or advising on the financial merits or otherwise of any debt instrument or investment product and no information within this communication should be taken as such, nor should any information in this communication be relied upon in making any investment decision.

Certification under the Climate Bond Standard only reflects the climate attributes of the use of proceeds of a designated debt instrument. It does not reflect the credit worthiness of the designated debt instrument, nor its compliance with national or international laws.

A decision to invest in anything is solely yours. The Climate Bonds Initiative accepts no liability of any kind, for any investment an individual or organisation makes, nor for any investment made by third parties on behalf of an individual or organisation, based in whole or in part on any information contained within this, or any other Climate Bonds Initiative public communication.

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