Description: This past week Ottawa carried out its first sale of green bonds. The federal government raised $5 billion in the transaction, with the proceeds slated to be directed towards fighting climate change. These bonds have an interest rate of 2.25%, two basis points lower than federal bonds of a similar maturity. Trevor Bateman, of CIBC Asset Management, refers to this modest amount as a “greenium.”
Date: March 23, 2022
1) Have you ever heard of green bonds before? What is your opinion of this type of investment?
2) Does your university have an investment club? Are green bonds an eligible investment under its guidelines?
3) Illustration 10A.1 on page 10-28 in Wiley’s Financial Accounting: Tools for Business Decision-Making illustrates that bonds often trade at a premium or a discount, rather than face value. Do a little research to determine if this issue of green bonds is trading at a premium or a discount.