S.he is one of the big trend topics on the international financial markets: green bonds, with the help of which only climate-friendly or otherwise sustainable projects can be financed. Initially, some states and government agencies brought green bonds onto the market, and a few weeks ago a car company with Daimler even raised 1 billion euros through such a bond in order to finance its transition to electromobility and other green projects.
The state development bank KfW has now calculated what green bonds can actually achieve. It was one of the pioneers in the market and is one of the largest issuers of these papers in the world. In the years 2014 to 2018 alone, it raised a total of 14.4 billion euros by issuing 18 green bonds. All in all, the projects financed with this would reduce greenhouse gas emissions by 12.8 million tons of CO2 equivalents per year, KfW now writes in a report. Or to put it even more vividly: The investments looked like 6.6 million cars were being taken off the roads.
Enjoy with caution
Of course, such calculations should be treated with caution. With the “green” money borrowed, KfW primarily finances its loan programs for renewable energies and energy-efficient construction. In addition, before the invention of green bonds, it had already promoted wind parks, photovoltaic systems and thermal insulation. In this respect, it is difficult to say whether and how much greenhouse gas has actually been saved and how much money the bank is now only taking on the capital market under a new label for these purposes.
However, the classification as a green bond now enables investors to invest specifically in this segment and requires issuers to have a certain obligation to provide evidence, which KfW is fulfilling with its report. The reports are drawn up in coordination with other international development banks. It can now be read that the construction of the DretzenII wind farm in Brandenburg, for example, or the construction of 22 energy-saving townhouses in Hamburg, was funded through the green bonds.
Great demand for KfW bonds
For 2020 KfW, which is also one of the most important addresses on the international bond markets outside of the green market, has now largely closed its emissions book. This week, it issued the last so-called benchmark bond for 3 billion euros and now raised 94 percent of its financing volume of 65 billion euros, as KfW announced on Wednesday.
Tim Armbruster, who is responsible for raising funds for the development bank, is delighted with such great demand from investors that this bond could also be issued at a negative interest rate of almost 0.5 percent: “We were able to use this transaction despite the very low A new issue premium of 1 basis point will generate demand of more than 11.9 billion euros, ”says Armbruster. “With a total return of minus 48.4 basis points, this is further evidence of the continued strong demand for KfW bonds.”