Why green bonds are raising the Mercury (ASX:MCY) share price

Mercury NZ Ltd (ASX: MCY) has issued new green bonds. What are green bonds and why have they boosted the Mercury Energy share price?
The post Why green bonds are raising the Mercury (ASX:MCY) share price appeared first on The Motley Fool Australia. –

Trees and a road shapes a dollar sign of green, indicating the share price movement of ASX eco companies

The Mercury NZ Ltd (ASX: MCY) share price is on the rise today after the company issued 200 million new green bonds. The gas and electricity company’s share price reached an intraday high of $5.81 this morning, up 3.75%. It has since dropped back and is currently trading at $5.68, up 1.43% for the day so far.

So, what are green bonds and why have they boosted the Mercury Energy share price?

Let’s dive deeper into the mystery of green bonds. 

Could green bonds be the future of environmentally friendly investing?

Green bonds are pretty much the same as normal bonds. The only difference is that a green bond must be certified by the Climate Bonds Initiative (CBI), with at least 95% of the proceeds going towards climate-friendly projects.

The major benefit for environmentally conscience investors is that they can be assured their bonds are going towards financing eco-friendly projects, while still having their investment backed by the issuer’s entire balance sheet. It’s a relatively low-risk way of investing ethically (although no investment is ever risk free).

More about Mercury Energy’s new green bonds

Mercury announced its intention to issue green bonds before the market opened on 15 March. Over the following two trading days, the company’s share price launched by more than 8%. On 19 March, the company announced the interest rate that would apply to the bonds. The second piece of news was met with another, though much smaller, share price gain of 2%.

Today’s news is that the company has officially issued the bonds to those who subscribed. 

The green bonds issued by Mercury have been earmarked to fund the company’s renewable energy projects. Mercury didn’t mention whether these would be new or existing projects.

Mercury states that 100% of the energy it provides is renewable. Thus, the raised capital has the potential to go towards the company’s hydro, solar, wind or geothermal initiatives. Or, possibly something else entirely.

Each bond will set back an investor NZ$1. Mercury intends to raise NZ$200 million. 

Not all willing investors were able to grab themselves a green bond. Mercury reserved them for clients of the Joint Lead Managers, NZX participants and other approved financial intermediaries.

The bonds are 5.5 year, unsecured, unsubordinated fixed rate green bonds, with an interest rate of 2.16% per annum.

Mercury share price snapshot

The Mercury share price is up 42% over the last 12 months, but it has dropped 10.69% year to date.

Mercury has a market capitalisation of around $7.6 billion, with approximately 1.3 billion shares outstanding.

Where to invest $1,000 right now

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes are the five best ASX stocks for investors to buy right now. These stocks are trading at dirt-cheap prices and Scott thinks they are great buys right now.

See The 5 Stocks

*Returns as of February 15th 2021

More reading

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post Why green bonds are raising the Mercury (ASX:MCY) share price appeared first on The Motley Fool Australia.

Trade The World Anywhere & Anytime!

Mobile app platform with over 50,000 global listed securities across 12 markets (over 70% global market capitalisation), right from your Android or iOS device.

Integrated with exclusive trading idea and investment analysis tools to help you find actionable insight on virtually every financial instrument across our 12 global markets, to help you optimise your trading strategies.

Refer Your Friends

Tell your friends about Monex and gift them FREE access to our trading tools.

We respect your privacy and will only send this one email notification to your friends. 

Share With Your Friends

Share on facebook
Share on twitter
Share on linkedin

Monex Trading Tools Access and Usage Terms

The Monex Trading Tools (referred to as ‘tools’ hereafter) are available to you inside your client portal;

To activate access to the tools, you must have a verified and approved trading account and have made a deposit of at least AUD $1000.

An active and funded account with a positive trading balance is required to continue to have access to the tools;

Although the tools are available to you indefinitely, Monex Securities may at it’s discretion disable access to the tools in the future;

Monex securities reserves the right to change these terms and conditions from time to time, as it sees fit, without notice.

Important Notice
iOS & Android App - 12 International Markets & Over 70% Global Market Cap. $0 Brokerage On US Trades. Click Here!