The Financial Markets Authority has granted a class exemption for ‘green’ bonds.
Photo: Wikipedia
Bond issuers will now have less paperwork to deal with when taking a so-called ‘green offer’ to market.
The Financial Markets Authority has granted a class exemption allowing bond issuers to make offers of green, social, sustainability or sustainability-linked (GSSS) bonds to forgo the full disclosure requirements.
“The exemption levels the playing field, if you like,” said Liam Mason, FMA executive director of governance, policy and strategy.
“If I have bonds listed at the moment and I want to do a second offer, they’re both vanilla bonds, then I can just do it with a simple term sheet. It’s called a cleansing notice and it’s straight to market.”
The exemption allowed the same with green, social, sustainability and sustainability-linked bonds, he said.
“If I’ve already got bonds listed and I want to offer a green bond, or I want to offer a sustainability-linked bond, I just have to set out in a simple term sheet what the sustainability projects are, how it’s going to be measured, and then it allows me to get into market quickly, which is really important in the debt markets.”
Mason said the change stemmed from talks with the finance sector as well as the FMA’s own research, which suggested burdensome disclosure requirements could be holding issuers back from offering more GSSS products.
“What we’re hearing from investors is that they want to be able to invest consistently with their values, whether it’s products that have an environmental link, whether it’s social or sustainability-linked projects that the issuer commits to as part of their offering, there’s real demand for this.
“This [change] makes it easier for these products to be offered to public investors.”
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