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Goldman Sachs (GS) Enters Green Bonds Market With $800M Deal

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Zacks Equity Research
·3 min read
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Per a Bloomberg’s article, The Goldman Sachs Group GS has issued its first-ever sustainable bonds worth $800 million. Also, the bank was forced to increase its offering by $50 million due to strong demand from investors. Single-tranche bonds, set to mature in five years, are expected to yield 0.4% more than Treasuries.

The proceeds from this offering are likely to be used to finance loans and investments made in projects and assets, such as clean energy, sustainable transport and financial inclusion that match the criteria for Goldman’s green and social framework.

Notably, per Goldman’s sustainability issuance framework, it seeks to finance and invest about $750 billion across nine key themes tied to climate transition and inclusive growth over the next 10 years. Bloomberg also reported that Goldman has organized a group focused on investment opportunities in clean energy, waste and other sustainability industries since October 2020.

Several major banks have made efforts in the space. PNC Financial PNC issued its first green bond in November 2019 to fund eligible projects that promote a transition to a low-carbon economy. Also, JPMorgan JPM entered this fast-growing market in September 2020 by selling $1 billion such bonds, with four years maturity.

Among other Wall Street banks, Citigroup C has made the largest deal in this space by issuing $2.5 billion of sustainable bonds in October last year.

Our Take

Marilyn Ceci, global head of ESG debt capital markets at JPMorgan, told Bloomberg that it expects the sustainable finance market to expand 49% by the end of 2021 compared with 30% projected in last October. Thus, Goldman’s decision to place foot in this fast pace-picking market seems encouraging.

Moreover, the key source of Goldman’s earnings stability lies in its diversified business. Traditional banking, along with a diverse product portfolio, is likely to help sustain growth.

The company has gained 43.4% in the past six months compared with 47.9% growth recorded by the industry.

Currently, Goldman sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

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