- We believe corporations could issue up to $28 billion in green bonds this year, a large increase on 2015 volumes.
- Forces driving rapid market growth include new issuances by highprofile corporations, a burgeoning Chinese market, emerging interest from U.S. utilities, strong investor demand, and increasing environmental disclosure requirements.
- We see signs that metrics to evaluate the level of disclosure and environmental credentials of green bonds are becoming more important to investors.
- Market pricing of green bonds is evolving and we believe a bond’s environmental credentials could contribute to pricing over the long term.
LONDON (Standard & Poor’s) April 15, 2016–Corporates could issue up to $28 billion in green bonds worldwide this year, estimates Standard & Poor’s Ratings Service in a report published today: “The Corporate Green Bond Market Fizzes As The Global Economy Decarbonizes”).
If issuance continues at the rate seen in Q1 2016, corporate green bond issuance would be about $15 billion, which would already mark a large rise from $9.6 billion issued in 2015. However, if the Chinese corporate green bond market takes off this year, as some market observers predict, this could add around another $13 billion to corporate bond issuance in 2016, by our reckoning, bringing total corporate green issuance to $28 billion. This is nevertheless subject to the release of the Chinese corporate green bond guidelines, expected this quarter.
“We think our estimates for market growth will prove robust given the trend for larger green bond issuances, led by Apple’s $1.5 billion issue in February,” said Standard & Poor’s credit analyst Michael Wilkins. “The types of projects being financed by green bonds are also widening, with growth into water and transport.”
Emerging issuance by U.S. utilities could further boost the green bond market. We also expect that increasing reporting requirements on corporations, either mandated or optional, to disclose environmental data in their annual reports, will fuel further issuance.
Investor demand for corporate green bonds, which companies issue specifically to fund environmental projects, will continue to outstrip supply this year following investor commitments at the Paris climate change negotiations (COP21) in December 2015.
Other signals that the corporate green bond market is rapidly evolving include increasing interest from investors in metrics to evaluate the level of disclosure and environmental credentials of green bonds.
“Market pricing of green bonds is still developing but, in the longer term, we believe bonds’ environmental credentials could contribute to their pricing,” said Mr. Wilkins.
We expect this reflection of a bond’s green credentials in its pricing will come initially in the secondary market. In the primary market, syndication desks will likely push for similar spreads to conventional bonds as the market develops so as to maintain interest from as large a pool of investors as possible. In the secondary market, no such pressure exists, so increased disclosure of the green credentials of a bond could drive demand and influence pricing in the same way as other factors, such as credit quality, yield, duration, and demand.
Corporate green bonds are issued by companies (as opposed to governments, municipalities, and development finance institutions), which use the proceeds raised by the bond to finance specific environmentally-focused activities or programs. Their coupons are repaid from the issuer’s general balance sheet which alleviates any project specific risk and the bond is typically assigned the companies’ credit rating.
The report is available to subscribers of RatingsDirect at www.globalcreditportal.com and at www.spcapitaliq.com. If you are not a RatingsDirect subscriber, you may purchase a copy of the report by calling (1) 212-438-7280 or sending an e-mail to firstname.lastname@example.org. Ratings information can also be found on Standard & Poor’s public Web site by using the Ratings search box located in the left column at www.standardandpoors.com. Alternatively, call one of the following Standard & Poor’s numbers: Client Support Europe (44) 20-7176-7176; London Press Office (44) 20-7176-3605; Paris (33) 1-4420-6708; Frankfurt (49) 69-33-999-225; Stockholm (46) 8-440-5914; or Moscow (7) 495-783-4009. Only a rating committee may determine a rating action and this report does not constitute a rating action.
A Good Look At How Homes Will Become More Energy Efficient Soon
Everyone always talks about ways they can save energy at home, but the tactics are old school. They’re only tweaking the way they do things at the moment. Sealing holes in your home isn’t exactly the next scientific breakthrough we’ve been waiting for.
There is some good news because technology is progressing quickly. Some tactics might not be brand new, but they’re becoming more popular. Here are a few things you should expect to see in homes all around the country within a few years.
1. The Rise Of Smart Windows
When you look at a window right now it’s just a pane of glass. In the future they’ll be controlled by microprocessors and sensors. They’ll change depending on the specific weather conditions directly outside.
If the sun disappears the shade will automatically adjust to let in more light. The exact opposite will happen when it’s sunny. These energy efficient windows will save everyone a huge amount of money.
2. A Better Way To Cool Roofs
If you wanted to cool a roof down today you would coat it with a material full of specialized pigments. This would allow roofs to deflect the sun and they’d absorb less heat in the process too.
Soon we’ll see the same thing being done, but it will be four times more effective. Roofs will never get too hot again. Anyone with a large roof is going to see a sharp decrease in their energy bills.
3. Low-E Windows Taking Over
It’s a mystery why these aren’t already extremely popular, but things are starting to change. Read low-E window replacement reviews and you’ll see everyone loves them because they’re extremely effective.
They’ll keep heat outside in summer or inside in winter. People don’t even have to buy new windows to enjoy the technology. All they’ll need is a low-E film to place over their current ones.
4. Magnets Will Cool Fridges
Refrigerators haven’t changed much in a very long time. They’re still using a vapor compression process that wastes energy while harming the environment. It won’t be long until they’ll be cooled using magnets instead.
The magnetocaloric effect is going to revolutionize cold food storage. The fluid these fridges are going to use will be water-based, which means the environment can rest easy and energy bills will drop.
5. Improving Our Current LEDs
Everyone who spent a lot of money on energy must have been very happy when LEDs became mainstream. Incandescent light bulbs belong in museums today because the new tech cut costs by up to 85 percent.
That doesn’t mean someone isn’t always trying to improve on an already great invention. The amount of lumens LEDs produce per watt isn’t great, but we’ve already found a way to increase it by 25 percent.
Maybe Homes Will Look Different Too
Do you think we’ll come up with new styles of homes that will take off? Surely it’s not out of the question. Everything inside homes seems to be changing for the better with each passing year. It’s going to continue doing so thanks to amazing inventors.
ShutterStock – Stock photo ID: 613912244
IEMA Urge Government’s Industrial Strategy Skills Overhaul To Adopt A “Long View Approach”
IEMA, in response to the launch of the Government’s Industrial Strategy Green Paper, have welcomed the focus on technical skills and education to boost “competence and capability” of tomorrow’s workforce.
Policy experts at the world’s leading professional association of Environment and Sustainability professionals has today welcomed Prime Minister Teresa May’s confirmation that an overhaul of technical education and skills will form a central part of the Plan for Britain – but warns the strategy must be one for the long term.
Martin Baxter, Chief Policy Advisor at IEMA said this morning that the approach and predicted investment in building a stronger technical skills portfolio to boost the UK’s productivity and economic resilience is positive, and presents an opportunity to drive the UK’s skills profile and commitment to sustainability outside of the EU.
Commenting on the launch of the Government’s Industrial Strategy Green Paper, Baxter said today:
“Government must use the Industrial Strategy as an opportunity to accelerate the UK’s transition to a low-carbon, resource efficient economy – one that is flexible and agile and which gives a progressive outlook for the UK’s future outside the EU.
We welcome the focus on skills and education, as it is vital that tomorrow’s workforce has the competence and capability to innovate and compete globally in high-value manufacturing and leading technology.
There is a real opportunity with the Industrial Strategy, and forthcoming 25 year Environment Plan and Carbon Emissions Reduction Plan, to set long-term economic and environmental outcomes which set the conditions to unlock investment, enhance natural capital and provide employment and export opportunities for UK business.
We will ensure that the Environment and Sustainability profession makes a positive contribution in responding to the Green Paper.”
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