According to Standard & Poor’s Ratings Service, 2015 could be a big year for green bonds. S&P predicts companies to issue $30 billion in bonds, which help fund environmentally beneficial projects in renewable energy, such as wind farms and solar installations, and energy-efficiency technologies, among other investments. Typically issued by development banks and utilities, corporations may take the lead this year and nearly double their investment in this new asset class from 2014 levels. The good news for these corporations and for investors is that S&P concluded that growth in the green bond market is less vulnerable to plummeting oil prices due, in large part, to a long term fear over climate change.
Green bonds not only offer a major new opportunity for cash-strapped state and municipal governments looking for new finance flows to fund green assets, but also for corporations seeking to raise capital for development projects. This booming asset class provides companies with upfront cash and long term payouts with the ability to structure favorable interest rates, creating an attractive investment with both financial and social benefits.
Special thanks to Morgan Gerard who assisted in the preparation of this post.