Since May 2020, nine companies have issued green convertible bonds. Among them is Neoen, which issued the first European green convertible bond for €170m on 28 May. Neoen is a renewable energy company that builds and manages power plants in solar, wind and biomass.
Électricité de France (EDF) sold a historic €2.4bn green convertible bond on 8 September, with the proceeds to be allocated to finance or refinance renewable energy production and storage activities consistent with EU requirements. This was followed by EDF.
Interestingly, the issuance of green convertible bonds is also on the rise. Before 2020, only two green convertible bonds were issued: Sumitomo Forestry (Japan) in 2018 and Link REIT (Hong Kong) in 2019.
The issuance of the notes is one component of these announced equity measures. "The swift and successful placement of the mandatory convertible bond indicates institutional investors’ confidence and belief in our overarching Siemens Energy strategy," said Maria Ferraro, CFO of Siemens Energy.
Global convertible bonds may benefit from several positive performance drivers in 2024. Equity exposure to attractively valued mid-cap growth companies, potential interest rate cuts, and historically high yields are among the reasons why we believe the asset class is positioned to perform well this year. Are the Stars Aligned for 2024?
The new convertible bond issues replacing them are largely oversubscribed, allaying fears of insufficient investor demand. Above all, the convertibles market will be stimulated by new issues, with a growing proportion of bonds linked to sustainable development, as has been the case in recent years, especially in Europe and the US.
Convertible Bonds: Are the Stars Aligned for 2024?
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