What causes the issue of green bonds in Moscow
Moscow has become the first region in Russia to initiate the issue of green bonds. The funds received from the sale of bonds will be used for projects related to ecology. Among the latter are activities that help preserve natural resources, as well as energy efficiency programs.
The papers will serve as a sub-federal green loan, and they have not been used in Russia until now. The Moscow government decided to take advantage of the lack of competition in the local market and issued its own bonds. So far, however, it is difficult for Russian buyers to trace their benefit over other securities.
Potential investors for bonds of this type are large banks and funds with a long-term perspective. Such organizations understand the need to implement sustainable development strategies. Therefore, it is important for them to have instruments with ESG factors in their portfolio. Experts note that the optimal solution in this case for Moscow would be to issue two types of bonds – infrastructure bonds and green bonds, and their ratio should be about 40/60.
It should be noted that the authorities of the capital already issued bonds in 2013. A total of 70 issues were placed and repaid on time. In circulation now there is one issue of bonds with a total volume of 30 billion rubles, which was submitted to the market in 2016. This amount is about 1.1% of the annual volume of revenues to the city budget. The maturity date of the debt securities is June 2022.If we consider the Russian bond market as a whole, it has grown significantly since 2020, its structure has changed. Over the past period, the volume of placed corporate bonds increased by 8%. The reduction of the key rate by the Central Bank contributes to this. Investors pay attention to bonds with good potential for growth and high income.
As before, a large number of securities are placed by large companies. For example, Russian Railways placed perpetual Eurobonds worth 230 bln rubles on the market and Gazprom placed 2.5 bln rubles on the market. It should be noted that this type of securities is relatively new for the Russian segment.
The number of high-yield bonds has also increased, although they carry a high risk due to the low rating of the company issuing them. Now the number of such instruments has exceeded 160 issues, which is so far a record for the market. Many investors are attracted by high-yield bonds, which are much higher than deposits. However, there is also a higher probability of losing money.
Securities of various IT-companies are also gaining popularity. Just for the last 9 months the issue volume here has grown 3.7 times.