French renewables IPP Akuo Energy has returned to the green bond market with a deal it claims illustrates “that a growing number of investors have organised themselves to be able to participate in the financing of the green economy”.
The company first came to market last June, but this time the transaction was almost €10m larger, at €44m. Its ability to raise more funds this time reflected not only its improved creditworthiness, it said, but also “an increasing eagerness among investors to finance the green economy”.
Mirova was one of “a number” of new investors on the order book, via its bond funds – one of which is dedicated to green bonds. The Paris-based firm was “persuaded” to participate by what Akuo describes as “the strict undertakings given by Akuo Energy to its subscribers in the use of proceeds, the traceability of the investments carried out and reporting”.
Proceeds from the bond will be used to refinance existing renewables assets and finance new projects.
In the US, American Municipal Power has issued an $80m bond in multiple tranches between two and 22 years, with coupons ranging from 3% to 5%. Proceeds will be used to support the construction of a 105MW run-of-river hydro project in the country, known as Meldahl.Sustainalytics, which provided the second-party opinion on the deal said it would not cause negative environmental impacts such as destruction of habitats for animals, or damage to the aquatic ecosystem – often associated with the construction of hydro assets – because it is built on an existing dam.
China has also seen a spate of green bond issuance, as it continues to dominate the market in 2016. In addition to CNY20bn from Industrial Bank of China, Shanghai Pudong Development Bank – the biggest issuer of the year so far – has returned to market with RMB15bn of notes. The Bank of Jiangxi has also entered the space, with a CNY5bn deal. All transactions are aligned with China’s national standards, but the Climate Bonds Initiative has flagged up the potential for proceeds to finance controversial environmental sectors, such as clean coal.
Nairobi is also reported to be looking at issuing a green bond. If it goes ahead, it will be only the second African municipality to tap the market, after Johannesburg issued in 2014. Nigerian government agencies are also mulling a transaction, according to local media.