The Magyar Nemzeti Bank (MNB) of Hungary published guidelines to help firms and investors in the issuance of additional market-based green bonds after the closure of the Growth Bond Program (also known as NCP). The NCP Program aimed to expand the market liquidity of bond market. Within the framework of NCP Program, market participants could purchase both traditional and green corporate bonds, which continue to be the primary means of attracting sustainable capital market resources. The guidelines on green bond issuance cover the main steps, documentation requirements, and key differences between the issuance of green bonds and the issuance of traditional corporate bonds.
The guidelines aim to provide potential issuers with an overview of the specific steps involved in issuing a green bond, to assess their time and resource requirements, and to identify stakeholders inside and outside the organization that need to be involved in a successful issuance. By issuing these guidelines, MNB seeks to encourage an increase in the share of sustainable commercial banking assets, including a reduction in corporate and municipal green capital requirements, which can strengthen bank demand for green bonds by reducing the cost of capital for bank green bond subscriptions. In addition to the environmental and public relations value of sustainable activities, green bonds have a strong capital market demand, as a result of which more favorable returns than traditional corporate bonds can be achieved in most cases. The demand for institutional investors in green bonds is strengthened by the proliferation of ESG funds, whose investment policies focus on investments in sustainable, social and responsible corporate governance.
Keywords: Europe, Hungary, Banking, Sustainable Finance, ESG, Green Bonds, MNB
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