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Green bonds, an alternative for smaller issuers?


Green could represent an interesting opportunity for smaller issuers, and as it has been reported that is picking up again. 

Borrowers with lower capital needs are struggling. However, alternative ways for financing are emerging.

Last week, Austria’s €4 billion green bond was priced at 5 basis points inside of the conventional pricing, while bankers agreed that KommuneKredit‘s €500 million deal would have been priced around 5bp below without a green label. 

Green is worth up to 2bp, an attractive choice for smaller issuers giving the record inflation rate of last month of 8.1%.

A 50-basis-point rate is unlikely, since investors’ margin for error is at its smallest level in years.

Government green bond issuance so far this year is around a third lower than last year’s rate. That represents a shift from the usual exponential growth of green bonds.

What is evident now is that green issuance in the European Union needs further agreements and adjustments.

Smaller borrowers can compensate for their lack of liquidity by adding a green label to their transactions. 

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