FX.co ★ Green bonds appear on financial markets

On November, three companies became the first corporate Green bonds issuers; proceeds from such securities are supposed to be invested in renewable energy. As the news agency Reuters reported, Green bonds saw a solid demand. They hardly differ from straight bonds in terms of interest rates. Meanwhile, Green bonds were issued by French power group EDF, Swedish property Group Vasakronan, and Bank of America Merill Lynch. As for the latter, it set the rate of return on securities equal to 1.359% for $500 million, The Wall Street Journal noted.
Besides, Reuters added that high demand for Green bonds may come as surprise because the number of governments is currently cutting their subsidies for renewable energy projects. Means to be raised from Green bonds sales will go for funding projects ranging from an eco-farm in China to a hydroelectric power plant in Chile.
The definition of what qualifies as a "Green bond" is not absolute, though. No single set of criteria has yet been agreed upon, though several competing versions exist, and many bonds are classed as "socially responsible" but are not marketed as "Green", even if they could have been.
Numerous large companies invent new types of securities aiming to raise money from investors. So, in November, Golden Sachs completed a $1 billion offering of floating-rate notes due November 2023. Usually, limited amounts of floating-rate offerings are dated no longer than five years. Recently, Islamic securities have been gaining popularity on financial markets; proceeds from such securities cannot be invested in gambling business or alcohol production.