SUSTAINABILITY BONDS. AN INTERNATIONAL EVENT STUDY

Sustainability bonds enable capital-raising and investment for those projects that have both a positive impact on the environment and a positive social outcome. This study examines the stock market reaction to the announcement of sustainability bonds issuance. The present research is designed as follows: first, an event study that examines the market reaction and second, a highlight of drivers influencing this market reaction via a linear regression with cluster-robust standard errors. Overall, small and negative sample-wide reactions to sustainability bond issue announcements were found. Additionally, the study finds significant negative abnormal returns before the publication in June 2018 of The Sustainability Bond Guidelines by the International Capital Market Association. Specifically, the size of the bond issue, whether the bond is callable or not, the announcement of the issue as a single event in a day, the company’s Return on Assets, the firm’s social disclosure score, and the issuance of the bond prior or after June 2018 are statistically significant factors that influence the stock returns of issuers.

Stock Market Reaction on Green-Bond Issue: Evidence from Indian Green-Bond Issuers

Purpose: A green bond is a financial instrument issued by governments, financial institutions and corporations to fund green projects, such as those involving renewable energy, green buildings, low carbon transport, etc. This study analyses the effect of green-bond issue announcement on the issuer’s stock price movement. It shows the reaction of the stock price after the issue of green bonds. Methodology: This study is based on secondary data. Green-bond issue dates have been collected from newspaper articles from different online sources, such as Business Standard, The Economic Times, Moneycontrol, etc. The closing prices of stocks have been taken from the NSE (National Stock Exchange of India Limited) website. An event window of 21 days has been fixed for the study, including the 10 days before and after the issue date. Data analysis is carried out through the event study method using the R software. Calculation of abnormal returns is done using three models: mean-adjusted returns model, market-adjusted returns model and risk-adjusted returns model. Findings: The results show that the issue of green bonds has a significant positive effect on the stock price. Returns increase after the green-bond issue announcement. Although the announcement day shows a negative return for all the samples taken for the study, the 10-day cumulative abnormal return (CAR) is positive. Thus, green-bond issues lead to positive sentiments among investors. Research implications: This research article will help the government issue more green bonds so that the proceeds can be utilized for green projects. The government should motivate corporations and financial institutions to issue more green bonds to help the economy grow. In India, very few organizations have issued a green bond. It will be beneficial if these players issue green bonds, as it will increase the firms’ value and boost returns to the investors. Originality/value: The effect of green-bond issue on stock returns has been analysed in some studies in developed countries. This is the first study to examine the impact of green-bond issue on stock returns in the Indian context, to the best of our knowledge.

The Relationship Between Board Composition and the Ratings Given to Green Bonds: An Empirical Analysis

Due to the growing number of green bond issues, a lack of mandatory standards and thus the growing phenomenon of greenwashing, an increasingly greater role is assumed by external auditors who are called upon to certify the ‘greenness’ of green bonds. These include rating agencies, which may be called on to express a green rating for each issue of green bonds. Based on a unique dataset made up of 66 green bond issues together with their respective green ratings from 2015 to 2020, the aim of this paper is to test the relationship between issuers’ board compositions and the green rating assigned to each bond issue. The results obtained confirm some conclusions already present in the existing literature and also open a new field of research concerning the green bond market, which has so far been little analysed, especially with reference to corporate governance.

Fan Involvement and Unusual Investor Behavior: Evidence from a Football Fan Bond

Sport clubs offer marginal substitutable services and thus achieve strong emotional ties with their customers and fans. If sport clubs need financial support from their fans via a bond, the behavior of these investors might differ from that of less tied-in bond investors. The degree of fan involvement might be a decisive factor. Therefore, we use survey data obtained during a football club bond issue. We find correlations suggesting that fan bond investors with a higher fan involvement have a higher probability of investing as well as a greater tendency toward unusual investment behavior. The results are of relevance to sport managers when planning the issue of a bond.

REGULATION OF THE ISSUE AND CIRCULATION OF CORPORATE BONDS IN EASTERN EUROPE

The formation and development of the corporate bond market is influenced by global regulatory reform and other government policy initiatives that affect all financial markets. Political, legislative, regulatory and fiscal changes must be well adapted to support the viability of corporate bond markets (both domestic and international). Financial market policy in general should not slow down bond markets, but should ensure optimal interaction between investors and issuers. Historical examples show how regulation, legislation, and other aspects of public policy can stimulate or slow down corporate bond markets. Currently, access to bond markets is limited for most companies due to the high cost of issuance, but the corporate bond market continues to expand. Regulation of the corporate bond market is a key factor that determines the possibility of attracting financial resources through this debt instrument from domestic and foreign investors. In this respect, it is important to pay attention not only to the issue of specific new regulatory and policy initiatives, but also to a careful review of the overall legal and regulatory framework. The purpose of the article is to systematize and analyze the legal framework for the issuance and circulation of corporate bonds in Eastern Europe. The article lists the main transactions in corporate bonds during their life cycle. The difference between the concepts of "corporate bond issue" and "corporate bond circulation" is substantiated. An analysis of the specifics of corporate bond regulation on the example of Ukraine, Bulgaria, Poland, Romania, Slovakia, Slovenia, Hungary and Croatia is carried out. The list of the basic laws of the countries of Eastern Europe regulating issue and circulation of corporate bonds is given. The common and distinctive features in the reporting and methods of information disclosure by corporate bond issuers in Ukraine and other Eastern European countries are analyzed. The structure of the corporate bond issue prospectus is determined. The main innovations in the Ukrainian legislation on the regulation of the issue and circulation of corporate bonds are analyzed.

Bahrain’s new premier faces difficult fiscal choices

Significance Manama is seeking multiple means to adjust to the impact of the pandemic, publishing a two-year budget in November that targets a steady decline in the fiscal deficit. Although Bahrain secured improved terms for its most recent bond issue in September, its debt-to-GDP ratio is climbing, to almost 130% this year. Impacts The new premier may incline to a more rigorous approach towards subsidies, benefits and taxation, but is likely to proceed with caution. The death of the veteran prime minister, Khalifa bin Salman Al Khalifa, who was close to key donor Riyadh, could introduce a new variable. Investors’ future interest in Bahraini bonds will depend on their perceptions of Saudi Arabia as an effective guarantor.

El mercado de capitales y su impacto en la economía ecuatoriana en el periódo 2001-2019

El Mercado de valores en el Ecuador, representa una fuente de financiamiento para las empresas y el país, analizando así el periodo 2001-20109. Para ello se consideró la metodología descriptiva, comparativa y bibliográfica, conociendo el impacto que el Mercado de capitales a tenido a través de las emisiones de bonos soberanos. De esta forma se conoció que el Mercado de valores es una alternativa de financiamiento para empresas e inversionistas del país. En Ecuador, el valor efectivo negociado resultó insignificante con una variación de 3% por año, teniendo resultados desfavorables en términos de desarrollo. El Mercado de valores representa desarrollo para el país, considerado así uno de los mecanismos de financiamiento para solventar la deuda pública, dinamizando de esta forma la economía. El Ecuador todavía no ha desarrollado este mercado debido a la poca inserción del sector privado y la limitada emisión de valores registrados. Palabras clave: emisión de bonos; Ecuador; inversionista; crecimiento económico. ABSTRACT The Stock Market in Ecuador represents a source of financing for companies and the country, thus analyzing the Stock Market the period 2001-20109. For this, the descriptive, comparative and bibliographic methodology was considered, knowing the impact that the capital market has had through the issuance of sovereign bonds. In this way it became known that the Stock Market is a financing alternative for companies and investors in the country. In Ecuador, the effective value traded was insignificant with a variation of 3% per year, having unfavorable results in terms of development. The stock market represents development for the country, thus considered one of the financing mechanisms to solve the public debt, thus boosting the economy. Ecuador has not yet developed this market due to the limited insertion of the private sector and the limited issuance of registered securities. Keywords: bond issue; ecuador, investor; economic growth.

Morocco’s investment focus may shift

Significance In July, a revised finance law was issued for 2020, as the impacts of policy responses to the pandemic rendered the original budget assumptions obsolete. Impacts The budget’s revised economic forecasts for 2020 are still likely on the optimistic side, to encourage consumer and investor confidence. A threatened second national lockdown would prove devastating and immediately derail the revised fiscal programme. Public-private partnership plans could take time to get going, but Morocco’s competitive advantages may present appealing opportunities. Rabat this month is expected to announce a further bond issue worth around USD2bn to shore up the public finances. Banks’ liquidity levels may become a source of increasing concern.

Paraguay's COVID-19 response may lose initial lustre

Subject The impact of COVID-19. Significance In response to the COVID-19 outbreak, the government has ditched the Fiscal Responsibility Law (LRF), in force since 2015, at the same time launching a 1-billion-dollar bond issue in order to cover a surging fiscal deficit. Paraguay has won plaudits for its timely response to the global spread of the pandemic with the introduction of a strict quarantine. Impacts Fiscal limits may continue to be breached as elections draw nearer. Business pressures will continue to tilt the balance towards increased borrowing rather than increased taxes. The government could lose the momentum gained from its COVID-19 response if related corruption allegations mount.