BIS Launches Second Green Bond Fund
- The euro-denominated, open-ended green bond fund for central banks builds on the success of the first, US dollar-denominated green bond fund
- The two funds belong to the BIS’s green bond fund initiative and invest in high-quality bonds that comply with international green standards and finance environmentally friendly projects
- The BIS and participating central banks are strongly committed to supporting environmentally responsible investment practices
The Bank for International Settlements (BIS) has launched a euro-denominated, open-ended fund for green bond investments by central banks and official institutions. The launch follows the successful introduction of a first BIS green bond fund denominated in US dollars in September 2019. Together, the two BIS green bond funds will manage some $2 billion in green bonds for central banks with the expectation that the funds will continue to grow considerably.
The funds have been developed with the support of an advisory committee drawn from a global group of central banks. They are part of the BIS’s green bond fund initiative, which helps central banks to incorporate environmental sustainability objectives in the management of their reserves and capital, in line with a growing demand for climate-friendly investments among official institutions.
The funds promote green finance through sizeable investments in environmentally friendly projects such as renewable energy production and energy efficiency, and support the adoption of best market practices and reporting standards to deepen the green bond market.
We will use our own funds to invest in the green bond fund set up by @BIS_org. This way we contribute to the global efforts to combat climate change. The fund provides capital for renewable energy production, energy efficiency and other green projects https://t.co/hLi1nLzOtH https://t.co/qLwWoFXWSL
— European Central Bank (@ecb) January 25, 2021
The two funds are structured according to Swiss law and belong to the BIS Investment Pool (BISIP) family, a format commonly used by BIS Asset Management for its fixed income investment products. They are managed in-house by BIS Asset Management. Eligible bonds have a minimum rating of A– and comply with the International Capital Market Association’s Green Bond Principles and/or the Climate Bond Standard published by the Climate Bonds Initiative. Furthermore, the BIS produces a dedicated yearly impact report for investors based on the information provided by the issuers of the bonds in which the funds invest.
The BIS is committed to supporting environmentally responsible finance and investment practices, in line with its participation in the Central Banks and Supervisors Network for Greening the Financial System.
Commenting on the launch, Peter Zöllner, Head of the BIS Banking Department, said: “Central banks around the globe have continued to support this joint green bond fund initiative and channel funds into the green bond market through the BIS. In line with the initiative’s objectives, we are continuing our dialogue with green bond issuers and remain committed to supporting the adoption of best market practices, including improved impact reporting, to deepen the green bond market.”
The BIS offers financial services to some 140 central banks, monetary authorities and international organisations worldwide, and has long-standing experience in managing fixed income portfolios.
RBC Capital Markets paid more than $800,000 to resolve charges that it engaged in unfair dealing in munis.
Electronification of the municipal bond market also presents a large opportunity.
The success of Northbound trading showed electronic execution is way forward for the bond market.
Investors will be able to better assess the economic stability and creditworthiness of issuers.
Nivaura has named a new CEO and Liquidnet Primary Markets is launching.