Green bonds are making headlines

1.

Bonds & Climate
Change
State of the Market 2016
Brazil Edition
Sean Kidney, CEO, Climate Bonds Initiative
Sao Paulo
2 August 2016

2. Green bonds are making headlines

2016 target $100bn
Green bonds are making headlines
80
PBoC estimate
$41bn from
China
60
$43 year to date
($8bn from
China)
40
China PBOC est.
Muni /provincial/
Provincial /City
City
Muni/
Development
Development
bank
Bank
20
Corporate
Corporate
Banks
Bank
ABS
ABS
0
2012
2013
2014
2015
2016

3. Investor interest

$93tn institutional investors AuM
- SRI = $21tn global
- $43tn at UN Climate Summit
Funds
managers,
mutuals,
foundations
$27tn
Insurance
$30tn
- $20tn insurers x10 climate investments by 2020
Sovereign
$6tn
Central banks: PBOC, BoE, various others
Pension
$30tn

4. Labelled Green Bonds

Germany $12bn
Netherlands $11bn
France $15.6bn
Supranationals
= $30bn
USA $24.8bn
China $14.4bn
> $10bn outstanding
$1bn - 10bn outstanding
Latest figure:
< $1bn outstanding
Brazil $1.05bn
Aust $2bn
SA $1.27bn

5. Renewables rather than transport

Energy Efficiency /
Low Carbon
Buildings
24%
Clean Energy
44%
Low Carbon
Transport
12%
Sustainable water
11%
Climate Adaptation
2%
Agriculture & Forestry
2%
Waste & Pollution Control
5%

6. Rules for a new market

Green Bond Principles – ICMA
Proceeds must go to green / Explain process for project selection; use 2nd party
review / Track proceeds; use auditor to verify / Report each year on details
Climate Bonds Standard & Certification: green definitions + assurance
China: Central Bank-led
France: “Energy and Ecological Transition for Climate” Label
Moody’s green rating: quality of review & reporting
G20 Green Bond recommendations

7. Expanding the investment landscape

8.

A $694bn
climatealigned
bond
universe
$118bn
labelled green bonds
$576bn
unlabelled climatealigned bonds

9. Climate-aligned bond universe

No rating
16%
AAA
15%
EUR
$110.7bn
USD
$160.2bn
< BBB 6%
BBB
10%
78% is
investment grade
GBP
$58.2bn
AA
37%
A
16%
Range of
Currencies
RMB
$239.3bn

10. Transport & energy are the largest themes

Transport & energy are the largest themes
Transport
67%
Waste & Pollution control 1%
Water 2%
Agriculture & Forestry1%
Buildings & Industry 2%
Energy
19%
Multi-sector
8%

11.

Climate-aligned bonds are in Brasil
Western Europe:
$195bn
USA: $111bn
China:
$246bn
Brazil climate-aligned
Issued BRL 10bn
Outstanding BRL 4.5bn

12. Brazil green & climate-aligned bonds

Brazil green & climate-aligned bonds
Climate-aligned outstanding
Examples of climate-aligned
Suzano Papel - paper/pulp 1,440m
CPFL Energias – renewables 1,026m
Sao Miguel de Gosto - wind 481m
All America Lat Logistic - rail 4,112.2m
All Malha Norte – rail 326.7m
All Malha Paulista – rail 166.7m
Concessao Metro RJ - rail 575m
MRS Logistica - rail freight 1,530.7m
Supervia - transit 300m
Labelled green bonds
• BRF: EUR500m
• Suzano Papel: US$500m

13. Opportunities in Brazil

Agribusiness
Forestry & paper
Renewable energy

14. Roadmap

1. Blue-chip issuance
2. Market education
3. Fiscally efficient support & incentives
4. Aggregation vehicles
5. Grow green projects pipeline

15. Green Infra Investment & INDCs

GREEN
BOND
S & CA
Green Infra
Investment
& INDCs
Investor-country
dialogue
India
Brazil
China
Green
Infras
Invest o
rs + Gr
tructu
een Inf
ra Dev
re Inv
eloper
s + Pu
estme
blic Se
ct or +
nt
De
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16.

Potencial de
Investimentos no
Brasil pós COP 21
São Paulo, Brasil
2 de agosto de 2016