Green Bonds Update & prospects

Louis Perroy, SEAsia representative

Climate Bonds Initiative

Singapore, 30 April 2015

Flat pricing

Vanilla

USD

$1.2bn

$11bn

$3.1bn

$36.6

bn

20

15

: $5

0 e

xpe

cted

T

arge

t $

10

0b

n

Fast growth

$88tn assets under management

$30tn Insurance

$27tn Pension funds – 19 out of 20 are public sector

$6tn Sovereign wealth

$25tn Fund managers, mutuals, foundations

(SRI = $13tn global)

EM = $5tn

50-60% bonds

Green/brown

Context: US$45 trillion of “interest”

US$45 trillion

US

$2

2.5

trilli

on

US$9 trillion

US$8 trillion

2014 by issuer type

It’s about Use of Proceeds

• Reporting / transparency

• Independent review

• Refi as well as projects

Proceeds to Green

• Governments & DFIs

• Corporates – this year’s growth area

• Asset backed: PPPs, banks, utilities, etc

• Municipalities

Any entity

• Investor diversification

• Investor engagement: “stickiness”

• Longer tenors

• Multi-asset pools

Issuer benefits

Majority of green bonds had 2nd opinion in 2014

Independent review

65%

EIB – no review16%

No review19%

Mid 2014 snapshot

Climate-themed

bonds $502.6bn

Green Bonds

$51bnProject Bonds

$7.8bn

Bonds are about re-financing

Asset-backed Re-financing by utilities Bank securitization

Corporate

Corporate

Mature assetLow risk, long-term holdings for long-term investors, 15-25 years

Public sector

DevelopmentHigh risk

Project finance

First 2-5 years

Equ

ity Bank

loans

Pro

ject

Public sector

Opportunities = scale / liquidityExpert groups = science-based definitions

Renewable energy

Energy storage

Geothermal

Green buildings

Green infra

Industrial efficiency

Clean energy supply

chain

Rail, BRTs

Low emission vehicles,

Electric Vehicles

Clean water, utilities

Storm adaptation

Waste management

Methane reduction

Agriculture, bioenergy

Sustainable forestry

Food supply chain

Reference:

www.ClimateBonds.net/Taxonomy

Standards & certification

Industry Advisory

Group

Expert CommitteesGreen Property, Geothermal, Low-Carbon

Transport, Bio-energy, Agriculture, Water

$34tn Climate Bond

Standards Board

Indices

The road to a US$1 trillion market

1. $100bn in 2015

Low-carbon transport / Green Property / Water

Green sukuk: MENA, Indonesia

Green covered bonds: EU

Green City Bonds

2. Market creation / Engaging EM pools of capital

China to rocket; India stirring; LatAm

Aggregation / warehousing solutions

3. Role of public sector and DFI’s: leveraging private capital

Kickstarting issuance and investment

Risk-bridging: credit enhancement, tax, regulation

Deal pipelines / INDC

www.climatebonds.net