Recent Green Bonds: Toyota Hybrids, SunRun, Efficient Homes and Data Centers
by the Climate Bonds Team Last month Toyota closed their second green bond for a whopping $1.25bn. Standard auto loans backed the issuance with proceeds to be used for electric and hybrid car loans; that means it’s more like a corporate green bond, where proceeds from a bond backed by existing (non-green) assets are directed green loans still to be made. Sunrun issued $111m of solar ABS, and a small unlabelled energy efficiency ABS was also issued by Renew Financial and Citi for $12.58m. Sunrun and Citi/Renew Financial are examples of ABS where the assets backing the issuance...
Toyota’s Asset Backed Green Bond: This Is Big
Sean Kidney Toyota Motor Corp. (NYSE:TM) will close mid-next week on what will be the world’s first green bond backed by auto loans – electric vehicle and hybrid car loans to be specific. And what a kickstart for that market, at $1.75 billion. According to a report in International Financing Review (IFR), the bond will be in multiple tranches, each at a different ratings level: A2 tranche, A3 and A4 (Moody’s ratings). First thing to know: they told the media a week ago it would be a US$774.675 million bond. Rumour has it that initial investor interest...
My Yieldco Raised Its Dividend With This Weird Trick
Tom Konrad CFA Clean energy yieldcos buck the general trend by paying out a large proportion of cash flow to investors, and rapidly increasing their dividends at the same time. The key to this trick has been their rapidly appreciating stock prices. High yield companies generally grow slowly, while high growth companies have low dividend yields. Normal companies grow by investing some profits in new business opportunities. Early stage growth companies typically retain all their earnings to invest in new business. More mature companies have fewer opportunities, and so share a larger proportion of...
Climate Bonds Mid-Year Roundup
by the Climate Bonds Team
Halfway in 2016: Issuance Up on 2015: New Underwriters from China: And Where Will Green Bonds Land by Dec 31st?
The Headline Figures:
At the end of Q2, issuance for 2016 stood at USD 34.6bn – bringing it close to the total issuance for 2015 with 6 months of the year to go.
In the first two weeks since the end of Q2 - total issuance surpassed the 2015 total. We expect even more in the second half of the year.
USD 18.6bn issued in Q2 alone making it the highest single quarter of green bond...
Solar Bonds and Other Green Income Investments Compared
by Tom Konrad CFA Clean-energy stocks’ performance over the last couple of years proves that it’s possible to do well – sometimes very well – while doing good. Unfortunately, it’s also possible to lose a lot of money. Case in point: solar installer SolarCity’s stock (SCTY) price has more than quintupled since its 2012 IPO, but has fallen 40% since the start of the year. Swings like these are just too wild for many investors to stomach. So the news that California-based SolarCity launched the first public offering of solar bonds last week likely piqued the interest of sustainability-minded...
Terraform Power Issues $800m High Yield Green Bond
by the Climate Bonds Team This week the yieldco TerraForm Power (TERP) issued a huge high-yield green bond; seeing more high-yield bonds is a sign that the green bond market is continuing to mature. In addition to TerraForm, more green bonds from repeat issuers OPIC, World Bank, IFC and Credit Agricole have been announced and will be closing in the coming weeks. For today, let’s dig deeper into the latest green high-yield offering. The US-based renewable energy company TerraForm Power Operating has issued US$800m of senior unsecured green bonds (debentures), making it the largest green bond of 2015...
How Much Can YieldCo Dividends Grow?
Tom Konrad CFA U.S.-listed YieldCos seem to offer the best of two worlds: high income from dividends, combined with high dividend per share growth. YieldCos are listed companies that own clean energy assets, and like the real estate investment trusts (REITs) and master limited partnerships (MLPs) they are modeled after, they return almost all the income from their investments to their shareholders in the form of dividends. Unlike REITs and MLPs, however, U.S.-listed YieldCos have management targets to deliver double-digit per-share dividend growth. YieldCos shown are NRG Yield (NYLD), Abengoa Yield (ABY), TerraForm Power...
Green Asset-Backed Bond From Hannon Armstrong Has Measured GHG Savings
by the Climate Bonds Team Hannon Armstrong’s (HASI) second green ABS, $118.6m, will save 0.39 tons of GHG annually per $1,000! ($100.5m, 4.28%, 19 yr, A and $18.1m, 5.00%, 19 yr, BBB) Hannon Armstrong (NYSE:HASI) closed its second green ABS bond (Sustainable Yield Bond) following its inaugural issuance in December 2013. The ABS was a private placement split into two tranches with different credit ratings (from Kroll Bond Credit Rating Agency): $100.5m with a rating of A and 4.28% interest rate, and $18.1m with a rating of BBB and 5.00% interest rate. Both tranches have a 19-year tenor....
$37B 2014 Green Bond Issuance Triples Market
by Tess Olsen-Rong Following a landmark green bond growth year in 2013, the labelled green bond market has once again experienced a year of incredible growth in 2014: by year-end there had been $36.6bn of green bonds issued by 73 different issuers – that’s more than a tripling of the market! The final figure was boosted by a late flurry of green municipal bonds. This exponential growth takes the total amount of green bonds outstanding to $53.2bn by the end of 2014. So, what happened to cause this tripling of issuance? Well, corporate and municipal bond...
Yieldco Valuations Look Attractive
By Tom Konrad Ph.D., CFA
Despite a run-up in the fourth quarter of 2023, it has been a long time since valuations of clean energy stocks have been this cheap. Perhaps it is worries about hostility towards clean energy under a new Trump administration, or disappointment at the slow implementation of the Inflation Reduction Act. Whatever the cause, prices are low, and many clean energy stocks are likely to produce good returns even if the political climate turns further against them.
This is especially true for companies that are less dependent on favorable policy or subsidies. For instance, Yieldcos, high...
Retail Renewable Energy Bonds Proliferating
by Sean Kidney Renewable Energy Finance via BigStockPhoto There has been a bit of interest recently about rapidly expanding options for retail investors to get involved in renewable energy projects. While we still see retail bonds as making a relatively modest contribution to the transition to a low carbon economy, they are important in engaging the public and creating awareness for green thematic investments which can only be good. Here’s a round up of some of the activity going on in the retail bond market (please note, this...
Record-Breaking $9bn Green Bonds Issued in Q1
Bridget Boulle It’s been another ground breaking quarter for green bonds – the biggest yet with just under USD9bn issued ($8.997bn). It seems our initial estimate of $20bn for the year will be met much sooner than we thought so we’ve revised it to $40bn (there are no rules). There have been new issuers, new currencies, new underwriters, new areas of issuance and, for the first time, a green bonds index. All good things, here is a summary… The development banks led the way for the quarter but not by too much: development banks = USD4.9bn while corporates =...
Hannon Armstrong Yeild On Track For 7% in Q4 With More To Come
Tom Konrad CFA After the close on Thursday, November 7th, Hannon Armstrong Sustainable Infrastructure Capital (NYSE:HASI) declared third quarter earnings. Results were in-line with my, and other analysts’ expectations: Earnings per share (EPS) of 14 cents, and a declared dividend of 14 cents as well. This more than doubled the second quarter’s 7 cent EPS and 6 cent dividend. Note: I have a large long position in HASI. HASI remains on track to reach managements’ dividend target of “over 7% of the $12.50 IPO price” (22 cents a quarter,) and provided some additional guidance for future dividends....
Brookfield’s Yieldco Buying Spree
by Tom Konrad Ph.D., CFA
Last week, a Bloomberg reported on a rumor that Brookfield Asset Management (BAM) was in talks to buy Abengoa's (ABGOY) stake in its former YieldCo Atlantica Yield (ABY). Atlantica had been looking for a new sponsor for well over a year since parent Abengoa filed for bankruptcy.
Purchasing Yieldcos (companies that own clean energy infrastructure and use the cash flows to pay large dividends to shareholders) is not new to Brookfield. Not only has BAM long sponsored Brookfield Renewable Partners, LP (BEP), a limited partnership that has essentially been a Yieldco since before the term was...
Investors Expect Rapid Growth At Pattern Energy Group
Tom Konrad CFA Pattern Energy's Gulf Wind Farm in Armstrong, Texas Disclosure: Long BEP. Pattern Energy Group (NASD:PEGI, TSX:PEG) completed a very successful Initial Public Offering (IPO) on the Nasdaq and Toronto stock exchanges on September 27th. Not only did the shares price at $22, near the top of the expected range, but the underwriters exercised their full over allotment option to purchase 2.4 million shares in addition to the initial 16 million offered. Total proceeds from the offering were $404.8 million. Most of the proceeds went to Pattern Energy Group, LP (PEGLP) in consideration for a...
First Solar and SunPower Lobby Shareholders to Sell 8point3 YieldCo
by Tom Konrad Ph.D., CFA
Will shareholders accept the deal?
On Monday, 8point3 Energy Partners, the joint YieldCo from First Solar and SunPower, entered into a definitive agreement to be acquired by Capital Dynamics.
When public companies are sold, it's almost always at a premium to the market price. It's that price premium that persuades shareholders to sell. So why would 8point3 (NASD: CAFD) shareholders accept a deal that offers them only $12.35, or 15 to 20 percent below the roughly $15 price CAFD has been trading around for the past three months?
To answer this question, we need a little history.
Jan Schalkwijk, founder...
