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July 22, 2015 -

Green Bonds Grow in Investor Popularity

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The global green bond market is forecast to grow to significantly this year [1].

Investment in green infrastructure is increasing at a rapid rate, here and overseas. We are receiving more and more enquiries from corporates about this avenue of fund raising.

There are several reasons for the rapid growth. One is the increasing adoption of ESG (environment, social and governance) by institutional investors. Another reason is the increasing use of ESG in risk management. This ranges from simple diversification of funding sources and investments to ESG overlays being increasingly used as another form of risk analysis and management by institutional investors.

Many supranational and sovereign investors also need to be able to demonstrate that they are responsible investors. Green bonds do that.

We expect green bond issuance to increase and diversify as governments across Asia Pacific look to build cleaner urban infrastructure and energy production.

Accordingly, leading companies looking to establish themselves in this build-out should consider their green bond issuance credentials.

BNP Paribas recently raised over A$200 million through a green bond US Private Placement (USPP) for Hallett Hill No. 2 Pty Ltd – a windfarm in South Australia owned by Energy Infrastructure Trust. The bond was certified green by DNV-GL and also rated by S&P.

Australia’s oldest global bank, BNP Paribas, was joint lead manager on the transaction, which was the:

• First Green Bond issued in the USPP market
• First Green Bond issued by a single asset project finance issuer in any market, and the
• First Australian wind project financed by US investors.

BNP Paribas took the lead in structuring the package and the green bond verification process.

[1] Some groups are forecasting it to grow up to US$100 billion in 2015 a three-fold jump from the estimated US$37 billion issued last year and the fledgling US$3 billion in 2012 – Climate Bonds Initiative in London April 2015.