Transcript Moving on From Symbolic Financing of Business as Usual

Moving on from symbolic financing of business as usual
projects
Asia Pacific Carbon Forum, 7th September 2016
Jay Mariyappan
Development - Finance - Technology
Green bonds today

Small segment of the capital markets (USD 34.6bn issued half year 2016)

Primarily financing activities that would have normally been financed

Is not providing cheaper capital for climate finance (pricing same as ordinary
bonds) – same yield & ratings as comparable investment products

Mainly provided by high investment grade issuers with ample access to finance
Climate Bonds Initiative 2016
Development - Finance - Technology
2
Climate-aligned bonds (which make up the
majority of issuance)
State of the Climate Bonds Market 2016 – Climate Bonds Initiative
3
Development - Finance - Technology
Transport segment
State of the Climate Bonds Market 2016 – Climate Bonds Initiative
Development - Finance - Technology
4
Energy segment
State of the Climate Bonds Market 2016 – Climate Bonds Initiative
Development - Finance - Technology
5
Why only business as usual projects?

Bonds are usually used to refinance existing assets and recycle into new
projects

Still relatively risk averse with regards to maturity of technologies, project size
and geography

Still being provided by mainstream (high investment grade) issuers
Climate Bonds Initiative 2016
Development - Finance - Technology
6
What do we need to move towards green bonds
playing a key role in mitigating climate change?

Should be mainstream rather than a small segment of capital markets

Bigger questions around vanilla bonds and the impact of the use of bonds
proceeds

At least USD 1 trillion per year by 2020 (Climate Bonds Initiative) as a
contribution to the USD 2-3 trillion needed to combat climate change

Domestic green bond issuance in emerging markets (requires domestic capital
as well as international)

Regulatory changes to allow for capital inflows in emerging market countries

Lower cost of capital for issuers – investors would have to sacrifice returns

Pureplay borrowers who can funnel bond proceeds to smaller, riskier projects

Government action to derisk projects (e.g. regulation guarantees and long term
contracts)
Climate Bonds Initiative 2016
Development - Finance - Technology
7
Jay Mariyappan
Managing Director, Delivery
Sindicatum Sustainable Resources Group
80 Anson Rd, #28-02, Fuji Xerox Towers
Singapore 079907
Email: [email protected]
Tel: +65 6578 9285 or +65 97110002
www.sindicatum.com
Development - Finance - Technology
8