Equities.com’s Post

“Sales of green bonds globally totaled $54.7 billion last month, making this the most active February since the inception of the green-debt market in 2007, according to data compiled by Bloomberg. About $83.3 billion worth of green bonds priced in January, also setting a record for that month. Sales of green, social, sustainability and sustainability-linked bonds stood at about $90 billion for February, close to the record of roughly $91.3 billion set in February 2023, data compiled by Bloomberg shows.  Looking ahead, Citigroup Inc. expects sustainable bonds to post record issuance this year, propelled by borrowers seeking cash to fund their energy-transition plans and potentially lower interest rates in the second half of 2024.”

Our Senior EM trader, John Montgomery, has been quoted in this recent article from LatinFinance on the important topic of sustainability linked bonds in Latin America. Our team at Balanz continues to monitor the matters which mean the most to both investors and the region. "Often priced between 5 to 25 basis points, these incentives were attractive when bond yields were under 4%. When they are closer to 10% it’s a different story, especially when a Fed comment can have a bigger impact on yield than whether or not a company has satisfied its CO2 emission KPIs." - John Montgomery Read the full article for more insights. https://lnkd.in/eAFdjA6B

I found this pretty interesting. An ESG-linked bond is a tool used to incentivize issuers to pursue predefined environmental, social, and governance (ESG) targets. The key term here is 'predefined.' These bonds carry a financial penalty linked to the bond when a company fails to achieve its ESG goals (typically resulting in higher interest rates). For example, a company with an ambitious net-zero goal for 2030 may need financing to kickstart their initiatives. They predefine the goals to be reached by that point, and if the milestone isn't met, they face a penalty. Approximately a quarter of these bonds in the $6.4 trillion ESG debt market include clauses that allow a company to sidestep this penalty if they anticipate missing a target. These bonds are known for incorporating opaque targets, vague terms and conditions, and negligible penalties when enacted. Asset managers like Nuveen are even refusing to accept them. Call it "growing pains". #climatefinance #greenbonds #esg #climatebondsconnect2023 https://lnkd.in/gaTHnKKB

2024 is predicted to be a bumper year for sustainable fixed income with record levels of issuance and increased variety as we see more capital backing for social impact and blue bonds, and increased interest in ‘orange bonds’. Author: Natalie Kenway https://lnkd.in/eJ6MKtvZ #fixedincome #bonds #sustainability

🗒 Last year, a record of approximately $925bn sustainable bonds were issued, highlighting there continues to be demand for the product. If the general fixed income calendar witnessed in the first week of 2024 is any indicator, it could be a record year for sustainable fixed income and the market overall. It is interesting to note the variety of labeled products mentioned in the article, not just the standard green, social, sustainable, and sustainability linked. Revived conversation of Blue and discussion of Orange bonds, as well as predictions by leading market participants. For reference, Orange is a new category referencing the color of Sustainable Development Goal 5, Gender Equality. Orange Bonds provides an asset class for gender lens investing, to mobilize the trillion-dollar bond market to build a gender-empowered financial system that embraces inclusion.

2024 is predicted to be a bumper year for sustainable fixed income with record levels of issuance and increased variety as we see more capital backing for social impact and blue bonds, and increased interest in ‘orange bonds’. Author: Natalie Kenway Read more on ESG Clarity EU: https://lnkd.in/eJ6MKtvZ #biodiversity #bluebond #bonds #diversity #fixedincome

According to data released by Bloomberg, January 2024 was the busiest on record for the ESG bond market, as sustainable bond sales touched US$ 150 billion. Declining borrowing costs and accelerating investor demand for green bonds are being touted as the primary reasons for the spike in sales. Leading the charge were governments and development banks, with the top issuers being France, the European Investment Bank (EIB), and the The World Bank Group. Check out the full article here: https://lnkd.in/dpH6puTC #SustainableFinance #GreenBonds #ESG #ESGLeadership

🇨🇦 Canada's 5 biggest banks accused of #greenwashing. "The complaint called out BMO, Scotiabank, CIBC, TD and RBC for providing possibly misleading environmental, social and governance (ESG) disclosures. These banks include sustainable finance as a major part of their plans to reach net zero carbon emissions in their investments by 2050. However, the complaint asserted that their ESG-related disclosures do not contain any quantitative standards or measurements of outcomes connected to sustainable finance." #canada #sustainableinvesting #banks #wealthmanagement #esginvesting

"Sustainable financing may involve eligible green activities... but do not necessarily curtail the growth of their absolute emissions," CIBC. While many Canadian banks have pledged significant sums towards sustainable initiatives, concerns have arisen regarding the effectiveness of these efforts in curbing emissions growth. Transparency and clarity in reporting are essential; the discrepancy between financial promotion and actual emissions reductions underscores the need for more rigorous evaluation and communication of banks' climate-related claims. The rise in fossil fuel financing exposure among Canadian banks, as reported by InfluenceMap, raises further questions about their commitment to environmental sustainability. As global pressure mounts for accountability in corporate climate pledges, it's imperative for banks to align their actions with meaningful emission reduction goals. Read more by Nivedita Balu from Reuters: #HalifaxWest #WinTogether #capitaladvisory #MandA #restructuring #operatingadvisory #FinanceExpert #Sustainability #ClimateAction https://lnkd.in/gxFNVHug

Interesting! 👏In recent years we have witnessed an increased appetite for debt instruments that focus on sustainable features. 🙌This is a win for ESG enthusiasts as both green and social bonds support the broad themes of ESG, capturing a range of goals that consider enterprise beyond conventional financial considerations. ✅Green bonds support capital-raising and investment for new and existing specialist projects with environmental considerations and social bonds raise funds for new and existing projects with demonstrable social outcomes. Sustainability bonds are golden as they bring together both green and social purpose. Insurance consideration: 🔏Insurers were arguably late to the sustainable debt finance party but with pressure on for corporates to have goals beyond growing bottom line or creating shareholder value the importance of Sustainable Finance Debt for Insurers is growing. Green bonds being the favoured SF debt instrument with less of an appetite for Social Bonds. 🙏🏻Given the insurable interest that lies within both green and social bonds issuance hopefully the momentum within the insurance industry to increase portfolio allocations to bonds with specialist climate / social focused funds will increase. ✍🏼The benefits go beyond ‘Corporate Social Responsibility’ as it presents an opportunity for new risk transfer products for trade credit insurers given insurance plays an important role in mobilising institutional investment to financing at scale. Risk transfer in this regard is particularly important for large-scale projects such as infrastructure development. FI risk transfer products can help support Bond issuance for the project pipelines of Development Finance Institutions, for example for the IFC, ADB, AIIB and the World Bank. 👷🏾♀️Additional scope for insurers to provide risk management support for critical infrastructure projects critical in developing countries where there is still a huge investment gap impeding the full potential for clean tech deployment. 💡A pragmatic win win given the extent of insurer involvement in the commercial operations of clean tech projects in such regions and given such are at the mercy of the infra developments the DFI’s are promoting bond financing for. #greenbonds #socialbonds #ADB #AIIB #Worldbank #tradecreditinsurance #impactinvesting