News in brief: Climate bonds, Extel/UKSIF, development impact bonds

Environmental

Neo Solar Power Corp., a Taiwanese solar cell maker, has issued a $120m (€88.7m), three-year convertible bond to raise capital for the purchase of raw materials for solar cells. A convertible bond, the security offers no coupon but instead a conversion premium of 10%. According to a local news report, the implicit share price for the convertible at issuance was TWD$35.50 (€0.96), rising to TWD$39.05 at maturity. The Climate Bonds Initiative, an NGO that promotes green bonds, said that while Neo Solar Power’s had not been independently certified as green, it considered it so because it was issued by a solar power firm.

The climate bonds market has grown by around 45% in a year from $346bn in 2013 to $502.6bn in 2014, according to a new report from the Climate Bonds Initiative and HSBC. $35.8bn is made up of labeled green bonds issued by corporations and development banks that has grown five-fold from a $7bn market size in 2013. Low carbon transport, notably rail, accounts for 71% of the total market, followed by clean energy (15%) and climate finance (10%).
Link to the report

The global wind market added 35 gigawatts (GW) of capacity in 2013 to reach 318 GW total generating capacity, a 12.5% increase over 2012’s capacity increase, but down on the average growth rate over the last 10 years of 21%, according to the annual market report by the Worldwatch Institute . Link to report

The World Bank Group’s International Bank for Reconstruction and Development (IBRD) has issued its first catastrophe “cat” bond, which will benefit the 16 member States of the Caribbean Catastrophe Risk Insurance Facility (CCRIF). The bond, a three-year, US$30 million transaction under IBRD’s Capital-at-Risk Notes Program, is linked to tropical cyclone and earthquake risk in CCRIF countries.

The European Investment Bank (EIB) is loaning €150m to finance a thermo-solar power plant located in Israel’s Negev desert. The project is a joint venture between the Israeli solar technology company Brightsource Energy and Alstom of France and is the first commercial application in Israel of an innovative Concentrating Solar Power (CSP) tower technology based on the combination of direct steam generation with a superheated steam cycle.

The Blue Circle, a Singapore-based renewable energy developer operating in the Mekong region (Vietnam, Thailand and Cambodia), is entering into a partnership with Annex Power, a leading renewable energy group in Southeast Asia, which it says should lead to approximately US$200m of wind project investments in Thailand.

Social

The Global Microfinance Fund from Swiss asset manager responsAbility has surpassed the $1bn (€738.9m) mark in terms of total assets, the fund’s latest monthly report shows. The report also shows that during the month of June, the fund invested $83m in 40microfinance institutions (MFIs) and fair-trade companies from developing countries. This brings the total number of MFIs and fair-trade firms invested in to 254 and 38, respectively. In the year to June 30, responsAbility’s Global Microfinance Fund returned 2.61% (in US dollars) and in the last six months, 0.92%.
Kepler Cheuvreux, the European financial services company, has been voted Europe’s leading brokerage firm for SRI & sustainability for the second year running in the Thomson Reuters Extel/UKSIF SRI & Sustainability Survey. Société Générale was at number two, followed by the Bank of America Merrill Lynch who took third place. The 2014 Survey represents the views of over 360 investment professionals from 27 countries.

The Irish government says it is seeking to attract pension fund capital to its social housing market, as it pledges to treble the number of units under construction to 25,000 a year by 2020. It named the European Investment Bank (EIB), the €6.9bn Ireland Strategic Investment Fund (ISIF) and the pensions sector as possible co-investors.

A majority of respondents to a survey of 63 global fixed income managers by JANA Investment Advisors in Australia say they are now taking environmental, social and governance (ESG) factors into serious consideration. The survey found that 88% of the respondents believed ESG factors influenced the financial outcomes of fixed income investments. Link to report

Zurich Insurance Group is working with global health NGO Population Services International to explore how large, international NGOs can access private, institutional investor capital. They have co-authored a report outlining six ways, and in the coming year both will work together to develop the conceptual framework for one of those six types of transactions, the development impact bond.
Link

Governance

The Finance Committee of the World Council of Churches (WCC) has voted to include fossil fuels in the list of banned themes for its treasury money. The WCC represents 345 member churches, but it is understood that the vote is not a recommendation to any of its affiliate church members.

The local government of Croydon in London has decided that its pension funds’ equity allocation in the UK’s local government pension scheme should switch to an ethical investment fund that screens out shares associated with tobacco, nuclear power and weapons. A councillor in Croydon said it would get a better investment deal for its fund, worth £705m, as ethical funds are performing favourably against other schemes.

The number of Brazilian companies in the BM&FBOVESPA index of the country’s largest companies complying or explaining on the publishing of extra financial information rose by 18 new firms in 2013-14 to represent a total of 71.17% of all companies listed on the exchange. The exchange says the figure is up from 45.31% in 2012.