The green bond issuance continues to gain popularity and US automaker Ford is poised to jump on the trend to fund its move towards a more electric vehicle (EV) offering.
“The Dearborn-based company markets ‘green bonds’ that are expected to mature in 10 years, according to a person with knowledge of the matter,” read a Detroit News article. “Initial pricing talks predict a return of around 3.625% and the net proceeds will be used exclusively for clean transportation projects and for the design, development and manufacture of its portfolio of battery-electric vehicles,” declared the person. “
Environment, social and governance (ESG) investment continues to gain momentum with more green bond issuance. Ford hopes this can help the company regain its investment status with its bonds.
Ford said last week it plans to cut its borrowing costs by more than half by buying back $ 5 billion of low-quality rated debt and is looking to chart the course to return to a quality credit rating investment “, adds the article. At the time, the company said it plans to raise at least $ 1 billion in this new green bond offering, a move that is part of a new sustainable financing strategy based on environmental goals and social. “
As the trend towards more green bonds by US companies continues to gain momentum, bond investors can join the action with the Avant-garde ESG US corporate bond AND F (VCEB). Fixed income investors can combine the yield of corporate bonds and ESG principles with VCEB.
According to its fund description, VCEB seeks to track the performance of Bloomberg MSCI American company ISR Select Index. The index excludes bonds with a maturity of one year or less and less than $ 750 million outstanding, and is filtered for certain ESG criteria by the index provider, which is independent of Vanguard.
VCEB strong points:
- Provides filtered debt issues for some ESG Criteria.
- Specifically excludes corporate bonds which, according to the index sponsor, are involved in and / or derive threshold income from certain activities or business segments related to: adult entertainment, alcohol, gambling, tobacco, nuclear weapons, controversial weapons, conventional weapons, civilian firearms, nuclear power, genetically modified organisms or thermal coal, oil or gas.
- Excludes corporate bonds which, as determined by the index sponsor, do not meet certain standards set by the index sponsor. ESG framework for evaluating controversies, as well as companies that do not have at least one woman on their board of directors.
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