With the popularity of green bonds surging, Pepsi has just decided to offer $1 billion of unsecured green securities, hoping to take them to the mainstream.
The US investment-grade corporate bond market is massive, estimated to be worth around $5.8 trillion. Green bonds are only a tiny fraction of it, but recently — they did start receiving some amount of popularity. Now, Pepsi has decided to make a move that will, perhaps, lead green bonds to the mainstream.
The company is well-known, as well as a highly-rated issuer, which is likely to work in its favor when it comes to making green bonds popular. They plan to offer $1 billion of senior unsecured green securities. At the same time, the 30-year bonds are going to yield 92 basis points.
People familiar with the company’s plans claim that Pepsi aims to invest the proceeds in several sustainable development goals, such as environment-friendly plastics, clean transportation, and more. There were already reports of investors placing massive orders, worth as much as $3.65 billion. Pepsi itself aimed to sell between $750m and $1 billion, as confirmed by inside sources.
As mentioned, green bonds are on the rise, and more than $120 billion was already issued in the first half of this year. This is a significant increase from the second half of 2018 when the total worth of issued green bonds was only $85 billion.
Earlier in 2019, Pepsi’s age-old rival, Coca-Cola, managed to amend a loan from June 2015 to add a sustainability element. Both firms are trying to change their practices and increase the use of recycled plastic for creating their bottles, which is expected to take place over the following ten years.
Green bonds can bring a lot of positive changes to modern society and the environment, especially if supported by large companies such as these. According to some sources, Pepsi also plans to use the proceeds from the deal to plant trees and invest in projects that will improve the company’s water use and more.
What do you think about Pepsi’s new decision? Can green bonds help protect the environment? Leave your comment below, and tell us what you think.
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