Second Largest Quarter For Green Bonds Ever

Third quarter reflects strong growth and new market entrants Overview The green bond market has kept its strong pace in Quarter 3 2017, reaching a total of USD27.7bn from July to September. On September 28th, the total amount of green bonds issued in 2017 ytd (USD83.2bn) overtook last year’s total issuance of USD81.6bn. We covered the big moment in our Blog Post here. Lots of new issuers The top sources of issuance were: Mexico - USD4bn China - USD3.9bn France - USD3.3bn U.S. - USD2.8bn India - USD1.9bn Mexico was a surprising addition to the number one spot, after issuing no green bonds in Q1 or Q2 this year. Big...

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...

Income From Hydroelectric Power

by Debra Fiakas CFA Are you an investor hungry for current income?  Is there a green line of global warming fear running through your investment selections?  I have stock that fulfills both requirements.  Brookfield Renewable Energy Partners (BEP:  NYSE) is a renewable power producer with assets in Canada, the U.S. and Brazil.  Brookfield generates over 5,900 megawatts of power each year from plants running on river water, wind or natural gas.  Another 2,000 megawatts is apparently under development in Canada and Brazil. What Brookfield does best is hydroelectric production.  The company claims over 170...

Capstone Infrastructure: Green Income At A Cardinal Discount

Tom Konrad CFA Capstone Infrastructure Corp.'s Gas Cogeneration facility in Cardinal, Ontario. Capstone Infrastructure Corporation (TSX:CSE, OTC:MCQPF. Disclosure: I own this stock) is an international operator and developer of green infrastructure assets and utilities which is currently selling at a significant discount to most comparable firms.  I recently ran a comparison of six similar Canada-listed firms, and Capstone seemed much cheaper on several measures. The Discount The following chart compares five renewable energy and green infrastructure firms with most of their operations in Canada: Capstone, Algonquin Power and Utilities (TSX:AQN, OTC:AQUNF), Brookfield Renewable Energy Partners (NYSE:BEP),...

Four Green Dividend Stocks That IPO’d In 2013

Tom Konrad CFA Disclosure: Long BEP, HASI. Canada’s stock exchanges have long had the lead as the place for energy infrastructure companies to list.  This includes green energy, as well as the fossil fueled sort.   Because Canada’s reporting rules are somewhat less stringent, and its markets less liquid than those in the US, the large number of offerings trade at lower valuations and higher yields than do their (few) US-listed equivalents. In fact, it was the promise of a higher valuation which led Brookfield Renewable Energy Partners (NYSE:BEP, TSX:BEP-UN) to obtain its US listing on June...

Why This German Solar Executive Is Skeptical About American YieldCo Assumptions

by Tom Konrad CFA Ever since the first YieldCo, NRG Yield (NYSE:NYLD), went public in 2013, it and other similar YieldCos have been reshaping the market for operating renewable energy assets, especially wind and solar PV farms.  A YieldCo is, to put it simply, a publicly traded subsidiary of a developer and operator of clean energy farms that uses the cash flow from its assets to return a high current dividend to shareholders. Most large, publicly traded clean energy developers have already launched or are preparing to launch a YieldCo. The current crop includes NRG Yield, Pattern...
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Funding The Energy Transition at Clean Energy Credit Union

by Tom Konrad, Ph.D., CFA With interest rates as low as they have ever been, I believe there is little point in small investors investing in bonds or bond funds, even if an allocation to fixed income is needed to match their investments to their ability and desire to take on risk.  With little potential upside from interest, I believe it is better to take advantage of the added safety of federally backed insurance by depositing money in a bank or credit union savings account or certificate of deposit (CD) ladder.  We can do that and avoid having our deposits fund...

Trash Stocks Trashed: An Income Opportunity?

Tom Konrad CFA Dumpster diving for high yielding gems. An earlier version of this article was written at the end of July and published on my Forbes blog, before the August market implosion. I've updated it here to reflect the new stock prices and some recent company news. Renewable energy has many advantages over fossil energy.  One of the most important is that it's renewable.  As supplies of Oil and other fossil fuels are used up, they become harder and more expensive to extract, while renewable energy is generally getting cheaper over time,...
REITS ESG Green 2022

Five Green REITs

by Tom Konrad Ph.D., CFA Why Green Buildings are Profitable Buildings Buildings are responsible for approximately a third of greenhouse gas emissions, so making buildings more efficient and switching them to renewable sources of energy is an essential part in addressing climate change. Fortunately, new technologies such as cold climate heat pumps, heat pump water heaters, induction stoves, as well as the ever falling cost of renewable electricity and improvements to insulation and building envelopes often provide opportunities to improve buildings while achieving extremely attractive investment returns from the energy and maintenance savings alone. Because of the great financial returns, building owners who...

SolarCity’s Second Solar Lease-Backed Bond Closes Thursday

SolarCity is on the road with a $70.2m, 8yr, BBB+ rooftop solar leases securitization; closes Thursday Sean Kidney US company SolarCity (NASD:SCTY) has priced a solar bond backed by cash flows from a pool of 6,596 mainly residential solar panel systems and power purchase agreements in California, Arizona, and Colorado. Expected bond figure is $70.2 million, but the bond doesn’t close until Thursday this week. Interest rate is 4.59%. Credit Suisse is structurer and sole bookrunner. This is SolarCity’s second solar securitization in six months. Their previous (ground-breaking) bond was for $54.4 million with an...

Is Suzlon’s $650m Wind Bond the First of Many?

India had been trying to get a corporate bond market going for 15 years – search “growing India corporate bonds” and you’ll find papers on the subject from the Reserve Bank of India, Bank of International Settlement and others scattered over past years. The latest Indian 5 year plan has this as a priority – and has green finance as a priority in a separate section. India has a particular need: a miniscule local corporate bond market means restricted financing options for business, including for renewable and energy efficient building developers – diversity with financing options helps drive down costs...
green swan

Green swan, Black swan: No matter as long as it reduces stranded spending

by Prashant Vaze, The Climate bonds Initiative In January, authors from several institutions under the aegis of BiS, published The Green Swan Central banking and financial stability in the age of climate change setting out their take on the epistemological foundations for, and obstacles against, central banks acting to mitigate climate change risk. The book’s early chapters provide a cogent and up-to-date analysis of climate change’s profound and irreversible impacts on ecosystems and society. The authors are critical of overly simplistic solutions such as relying on just carbon taxes. They also recognize the all-too-evident deficits in global policy to respond to the threat. In short, they accept the need for central banks to act. The Two Arguments  The paper makes two powerful arguments setting out the challenges central banks face using their usual mode of working. Firstly, climate change’s impact on financial systems is an unknowable unknown – a...

Will Investors Flock to SunEdison’s Emerging-Market YieldCo?

by Tom Konrad CFA SunEdison is proposing something entirely new: a YieldCo with a focus on projects in Africa and Asia, but it's a long way between an S-1 filing with the SEC and and IPO. The June launch of SunEdison's (SUNE) first YieldCo, TerraForm Power (NASD:TERP), transformed the parent company's prospects. Now it wants to repeat the performance with a first-of-its kind YieldCo that will focus on investment in Africa and Asia. A YieldCo is a publicly traded company that is formed to own operating clean energy assets that produce a steady cash flow,...

Atlantica Q1, Buying Hannon Armstrong

By Tom Konrad, Ph.D., CFA Here are two more updates from last week on Patreon.  Also, I realize I neglected to publish the monthly performance chart for my 10 Clean Energy Stocks model portfolio here at the start of the month, so here it is as well: Atlantica Sustainable Infrastructure Earnings (published May 11th) Atlantica Sustainable Infrastructure (AY) released its first quarter earnings announcement and financial statements on May 6th. Atlantica is one of the higher yielding Yieldcos, 5.3% at the new quarterly dividend rate of $0.43 and a $32.50 stock price.  The dividend is safe, since most of Atlantica's debt is fixed rate,...

Buying Innergex – Texas Was Bad, But Not That Bad

By Tom Konrad, Ph.D., CFA Last week, I published this call to buy Innergex (INGXF, INE.TO) because investors had been overreacting to the losses from the February cold snap in Texas.  The stock is up since then, but still seems a decent value. Canadian Yieldco Innergex Renewable Energy (INGXF, INE.TO) took a big financial hit from the power disruptions in Texas in March.  It's complex, but their financial hedges on power prices for three of its wind farms ended up creating enormous liabilities - more, in fact, than two of their wind farms are worth.  Two of their facilities also had benefits...

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...
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