Evidence Mounts for Green Bonds Outperforming Conventional: HSBC

Evidence Mounts for Green Bonds Outperforming Conventional: HSBC

Evidence Mounts for Green Bonds Outperforming Conventional

Green bonds price the same but trade higher, report says. Demand rising for environmentally friendly investments.

Evidence is mounting that bonds that finance environmental projects perform better than conventional ones, HSBC Holdings Plc said in a report. The U.K.’s largest bank said green bonds are trading closer to benchmarks than regular debt issued by the same entity, particularly in developed markets. This may be due to demand for the securities pushing investors to pay steeper prices for green bonds in the secondary market.

Evidence Mounts for Green Bonds Outperforming Conventional: HSBC

“Our analysis suggests there is value in green bonds for bond investors,” wrote Michael Ridley, a green bonds and corporate credit analyst at HSBC who co-authored the report. This may dissipate in the future if there’s a sharp rise in supply, he said.

Green bonds make up a tiny corner of the trillion-dollar debt market, yet their issuance has grown from a few hundred million to $95 billion last year. Bloomberg New Energy Finance raised its prediction for 2017 to $130 billion from $123 billion, after the first half of the year smashed records.

 

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