Renewable Energy Bond (11.9%)
Property Bond (10.3%)
Commodities Bond (8.1%)
Bank Bond (7.8%)
What Are Bonds?
A bond is a debt security, similar to an IOU. Borrowers issue bonds to raise money from investors willing to lend them money for a certain amount of time.
When you buy a bond, you are lending to the issuer, which may be a government, municipality, or corporation. In return, the issuer promises to pay you a specified rate of interest during the life of the bond and to repay the principal, also known as face value or par value of the bond, when it “matures,” or comes due after a set period of time.
Investors buy bonds because:
- They provide a predictable income stream. Typically, bonds pay interest twice a year.
- If the bonds are held to maturity, bondholders get back the entire principal, so bonds are a way to preserve capital while investing.
- Bonds can help offset exposure to more volatile stock holdings.
Renewable Energy/Green Bonds
Investment in renewable energy has increased by 55 percent in the last decade, but has stalled in recent years, even as energy demand has grown. Due to our use of fossil fuels to fill the gap, energy related CO2 emissions rose by 1.7 percent last year.
Those of us involved in the clean tech industry are well aware that financing is a key component of growing clean tech adoption. As with all things, this brings both social responsibility and business opportunity.
Put simply, property bonds are a way for developers to raise the required funds for a project in the form of loans from investors.
The word ‘bond’ is used as these loans are in the form of a legally binding agreement between the investor and the property developer.
The contract explains how the capital provided by the investor will be used, the interest payable on the investment, how capital will be secured, and when the investment will be repaid to the investor.
A commodity-backed bond is a type of bond whose value is directly related to the price of a specified commodity. These bonds are generally issued by the companies that produce the associated commodity. Some of the commodities that bonds may be linked to include oil, gold, and coal.
Unlike most bonds, a commodity-backed bond will experience fluctuations in value because of its basis on the price of the specified commodity. The bond’s issuer will determine how the bond’s value will change with the price of the commodity.