Green Bond Availability Grows

Around $28 billion in green bonds are available globally for automakers to help fund their transition to electric vehicles (EVs), finds an article in Bloomberg Intelligence.

This is double the amount raised by the sector in 2021, according to Bloomberg Intelligence.

The increased amounts are partly because of up to $132 billion in automakers’ bonds maturing in 2023, which can be rolled into green bonds, noted Bloomberg Intelligence Analyst Christopher Ratti in a note.

Maturities for 2023 will average about $11 billion a month, with March and April having the highest dollar amounts, the analysis found.

Automakers are tapping debt markets to finance cuts in carbon emissions and the transition to EVs.

“The commitment to carbon neutrality remains a key component of our expectations that green-bond issuance might double in 2023,” Ratti said.

The most bonds issued in 2022 in the auto sector went to Volkswagen AG, Honda Motor Co., General Motors Co. and Ford Motor Co.

Volkswagen issued over $4 billion in 2022 and may not need to issue more in 2023. However, Honda and GM tapped the green market for the first time in 2022, so there may be potential for more sales in 2023, according to Ratti.  

Honda noted in a statement to Bloomberg that it does not have specific plans for issuing more bonds, but as funding needs arise, the company will “consider raising funds with the most appropriate method and in the most appropriate market while taking various factors into consideration such as the market, environment and funding costs.”

Ratti also suggested that:

• Toyota Motor Corp., which hasn’t had any issuance since 2019, could revisit the market this year.
• Mercedes-Benz Group AG, which didn’t come to the market in 2022, may issue green bonds to fund expanded electrification needs.
• BMW AG and Nissan Motor Co. may also consider green bonds as they look to meet lower emissions and EV targets. 

Originally posted on Auto Dealer Today