Solactive AG, Lyxor Asset Management UK LLP and the Climate Bonds Initiative (CBI) are excited to announce the release of the Solactive Green Bond EUR USD IG Index, the first index allowing investors to capture the performance of investment grade labelled green bonds that are denominated in EUR and USD. The index combines Climate Bonds global green bonds data capabilities with Solactive’s expertise in index development and calculation. The index is licensed to Lyxor International Asset Management.
This new index launch comes at a time of increased efforts at the national and international levels to channel capital towards environmentally-friendly projects in light of the global challenges brought about by climate change. The green bond market was initially pioneered by international institutions, such as the World Bank and the European Investment Bank, and is now being increasingly driven by corporate and sovereign issues. The green bond market has registered a strong start in 2017 with a record issue of 7 billion EUR by the French government, only a few weeks after Poland’s entry into the green bond space in December 2016 with the world’s first green sovereign bond.
Foreseeable regulatory changes aimed at reducing fossil fuel dependence and consumption mean that more funds will be dedicated to the provision of climate-friendly products and services in the future. Since the launch of the Solactive Green Bond Index in March 2014, which has been the world’s first green index, green bonds have evolved from a small niche to a multi-billion-dollar market characterised by increased liquidity.
Henning Kahre, Head of Research Solactive AG, commented: “We continue to see growing demand for indices underlying ESG-related investment solutions. Considering the success of the Solactive Green Bond Index, the new Solactive Green Bond EUR USD IG Index allows investors to gain exposure to the investment grade segment of the green bond market for the first time.”
Matthieu Mouly, CEO of Lyxor UK LLP, said: “Lyxor is proud to be licensed for this index which will provide access to an asset class that we believe will become essential in the very near future. By providing a simple, diversified and robust way to access Green Bonds, this Index allows investors to mobilise their capital towards the enhancement of our environment for the future.”
Sean Kidney, CEO Climate Bonds Initiative, added: “The launch of this Index is another sign of market maturity. As Institutional investor interest develops and the labelled market grows in the hundreds of billions annually, a rigorous, investment grade Index provides a strong foundation to assist major green bond based portfolio and capital allocation decisions.”
The index universe comprises all USD and EUR denominated investment grade bonds that have been defined as green bonds by the Climate Bond Initiative. To be included in the index, the amount outstanding must be at least EUR 300 million and USD 300 million for bonds denominated in EUR and USD, respectively, with time to maturity of at least 12 months.
