Green Debt Market Faces a Rare Default
(Bloomberg) -- An Australian company that promised to penetrate the $662 billion market for clean power storage by the first half of this year is struggling to drum up $1 million to pay interest on two green bonds. If it doesn’t find the cash by the end of next week, it’ll be a rare default in the green bond market.
Queensland-based Energy Storage Pty Ltd failed to send funds to an issuing entity owned by London-based bond originator Bedford Row Capital when coupons were due on Jan. 6, according to a statement Tuesday. The company has now 14 days to pay them before default. Energy Storage, which is set to launch onsite clean power storage by the first half of 2022, didn’t respond to a request for comment from Bloomberg News.
The two $55 million bonds sold in 2020 issued in both dollar and sterling were sold by Sustainable Capital Plc, a debt issuance vehicle set up two years ago to fund green projects. It’s part of the Bedford Row group, a bond originator that owns platforms to sell notes to investors on behalf of small firms that don’t have direct access to capital markets.
If there’s no payment by the deadline, the securities will join a small group of five bonds that have defaulted, out of a global pool of more than 5,300 green bonds recorded by Bloomberg. It’s a corner of the market that’s been growing fast on the back of investors demanding ESG-compliant securities. Last year, there were $540 billion green bonds sold globally, more than double the 2020 tally, according to data compiled by Bloomberg.
The Energy Storage securities are the latest notes issued out of Bedford Row vehicles poised to go awry. In recent years, the firm arranged about 140 bonds for a variety of businesses, according Levy, some of which have paid coupons late or went insolvent, filings show. Among them a Cape Verde hotel developer, a company that leased sculptures by Auguste Rodin to raise financing and an Australian mining company, according to filings.
“Deals don’t always work as they are supposed to,” Bedford Row’s Chief Executive Officer Scott Levy said in a telephone interview on Wednesday when asked about defaulted bonds.
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