Taking pride in being a duly regulated banking institution and the first entity to offer online trading services, Saxo Bank has released a detailed analysis of the future of Green Bonds in the industry. The financial expert has affirmed that Green Bonds will make a profitable investment in the future because of the low supply and high demand for the financial instruments.
What are Green Bond Securities?
In simple words, green bonds are financial securities that help investors pool funds by investing in projects related to climate and sustainable environment. These bonds have come into the limelight in the current year due to the global collective growing concerns related to the environment and sustainable development. The subject was mentioned by the US Presidential candidate Joe Biden in his election campaign and has become an integral part of government agendas worldwide. The green bond securities are studded with several lucrative benefits, including reduced volatility, good returns, and support from a prominent institution.
Green bonds can be issued by banking institutions, business entities, and government authorities. Recently, Germany launched its first green bond that witnessed a whopping demand of $33bn from investors. The European corporate industry has been quite an active participant in the green bonds sector ever since the concept was introduced in 2007 by the European Investment Bank in the region. Volkswagen, the automobile giant, launched green bonds this month with 8,10, and 12 maturity years to fuel its projects aimed to overtake Tesla.
Why choose Green Bonds as an Investment Solution?
As per the post, the coronavirus pandemic has reduced the supply of the green bonds that has eventually made these bonds rare and has given them the status of a secured asset in the space. ECB has announced to kickstart the acceptance of green bonds as collateral in 2021, making its demand surge even higher. During the beginning of 2020, Moody’s green bond issuance rating plunged down to $225bn figure. Green bonds give due exposure to ESG projects that reduce the risk of fined and disinvestment for the owners. The investors will follow the ESG protocol while their funds will be pegged by a stable entity known by them before blocking the capital.
Saxo Bank allows its customers to trade in green bonds pegged against reliable names of the industry. The available products include UCITS: Lyxor Green Bond (DR), UCITS ETF, and others. The bank offers the best-in-class security and boasts of a diverse list of supported securities so that investors can be spoilt for choice and returns as well.