oecd giff 2016 session 6: christopher kaminker
TRANSCRIPT
Christopher R. Kaminker
Economist – Project ManagerOrganisation for Economic Co-operation and Development (OECD)[email protected]
CONFIDENTIAL. This presentation is solely for the use of the intended audience. No part of it may be circulated, quoted or reproduced without prior written approval from the OECD. This presentation represents the views of the author alone and does not represent opinions, estimates or forecasts of the OECD or its member countries. This material was used during an oral presentation; it is not a complete record of the discussion.
http://www.oecd.org/cgfi/quantitative-framework-bond-contributions-in-a-low-carbon-transition.pdf
2015 green bond issuanceRegion: Global Region: China, Japan, EU, US
2035 annual low-carbon debt financing needsRegion: China, Japan, EU, US
2035 annual low-carbon investment needsRegion: China, Japan, EU, US
2035 annual low-carbon bond issuance potential scenarios
2014 total bond issuanceRegion: China, Japan, EU, US
A framework for understanding scenarios
Methodology: Steps taken in developing a quantitative model and analytical framework
Investment need
• classify investment needs by sectors and regions• use technology and project profile to classify as needing public, private, multilateral finance• determine projects' life-cycle, risk-return profile (technology maturity, competition, policy and
supporting measures (Fit and PPA)• determine projects’ possible capital structure under different scenarios
Debt finance
• determine debt finance from capital structure identified above• determine portion which can be refinanced by debt across project life cycle• determine refinancing and restructuring needs
Bond Market
• identify scope for bonds (new finance and refinance) by type (Corporate, Project, SSA, Sovereign and Municipal)
• use past trends and potential future policy developments to derive scenarios by bond type• use bond maturity profile by type of bonds to derive recycled and new injection of funds in
bond market needed each year
Implication for II asset allocation
• analyse needs of Institutional Investors in the context of expanding green bond investment opportunities
• propose relevant policy measures to enable greater participation of II
Total in
vestm
ent
Bonds
Munici
pal a
nd so
verei
gnSSA
Corpora
te
Projec
t
ABS and C
LOLo
ans
Financ
ial se
ctor b
onds
Equity
Total b
onds
0
500
1,000
1,500
2,000
2,500
2,262
490
29 18 43 19 381
673
231
1,099
720
Financing by type of capital and bond (USD billions)Annual basis in the 2031-2035 period
5
Potential evolution of the market: Annual bond issuance amounts and size of the market (2 scenarios: baseline and high securitisation)
2015
2017
2019
2021
2023
2025
2027
2029
2031
2033
2035
-500
500
1,500
2,500
3,500
4,500
5,500
100
300
500
700
900
1,100
1,300
1,500
1,700
1,900
Amount outstanding Issuance
bond
s ou
tsta
ndin
g in
four
regi
ons
($bn
)
Ann
ual b
ond
issu
ance
in fo
ur
regi
ons
($bn
)
Note: Error bars represent the enhanced securitisation scenario, based on a 10% increase in asset securitisation rate across allsectors over the baseline scenario, which incorporates a more conservative asset securitisation assumption. “Outstanding” refers tocumulative amount of bonds issued that have not yet reached redemption or maturity.
Asset-backed and financial sector bonds have the largest potential to scale
0500
1,0001,5002,0002,5003,0003,5004,0004,5005,000
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
Bon
ds in
the
US
, EU
Jap
an a
nd
Chi
na -
amou
nt o
utst
andi
ng (
$bn)
Municipal and sovereign SSA Corporate
Project bonds ABS and CLO Financial sector
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
0
1,000
2,000
3,000
4,000
5,000
6,000
0500
1,0001,5002,0002,5003,0003,5004,0004,5005,000
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
Bon
ds in
the
US
, EU
Jap
an a
nd
Chi
na -
amou
nt o
utst
andi
ng (
$bn)
Municipal and sovereign SSA Corporate
Project bonds ABS and CLO Financial sector
0500
1,0001,5002,0002,5003,0003,5004,0004,5005,000
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
Bon
ds in
the
US
, EU
Jap
an a
nd
Chi
na -
amou
nt o
utst
andi
ng (
$bn)
Municipal and sovereign SSA Corporate
Project bonds ABS and CLO Financial sector
0500
1,0001,5002,0002,5003,0003,5004,0004,5005,000
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
Bon
ds in
the
US
, EU
Jap
an a
nd
Chi
na -
amou
nt o
utst
andi
ng (
$bn)
Municipal and sovereign SSA Corporate
Project bonds ABS and CLO Financial sector
0500
1,0001,5002,0002,5003,0003,5004,0004,5005,000
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
Bon
ds in
the
US
, EU
Jap
an a
nd
Chi
na -
amou
nt o
utst
andi
ng (
$bn)
Municipal and sovereign SSA Corporate
Project bonds ABS and CLO Financial sector
0500
1,0001,5002,0002,5003,0003,5004,0004,5005,000
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
Bonds in the US, EU Japan and China - amount outstanding ($bn)
Municipal and sovereign
SS
AC
orporate
Project bonds
AB
S and C
LOFinancial sector
0500
1,0001,5002,0002,5003,0003,5004,0004,5005,000
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
Bon
ds in
the
US
, EU
Jap
an a
nd
Chi
na -
amou
nt o
utst
andi
ng (
$bn)
Municipal and sovereign SSA Corporate
Project bonds ABS and CLO Financial sector
0500
1,0001,5002,0002,5003,0003,5004,0004,5005,000
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
Bon
ds in
the
US
, EU
Jap
an a
nd
Chi
na -
amou
nt o
utst
andi
ng (
$bn)
Municipal and sovereign SSA Corporate
Project bonds ABS and CLO Financial sector0500
1,0001,5002,0002,5003,0003,5004,0004,5005,000
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
Bon
ds in
the
US
, EU
Jap
an a
nd
Chi
na -
amou
nt o
utst
andi
ng (
$bn)
Municipal and sovereign SSA Corporate
Project bonds ABS and CLO Financial sector
0500
1,0001,5002,0002,5003,0003,5004,0004,5005,000
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
Bon
ds in
the
US
, EU
Jap
an a
nd
Chi
na -
amou
nt o
utst
andi
ng (
$bn)
Municipal and sovereign SSA Corporate
Project bonds ABS and CLO Financial sector
Potential and speed of scale-up for bonds outstanding varies by type of bond, sector and sub-sector (USD bn)
8
A snapshot of the Japanese market: potential annual issuance and outstanding to 2035 (USD billions)
0
50
100
150
200
250
300Municipal and sovereign SSA
Corporate Project bonds
ABS and CLO Financial sector
0
40
80
120
128
15 4 2 2 1 6
34 11
79
26 Annual issuance in 2031-2035 period
Bonds outstanding to 2035