Citigroup Inc. (NYSE: C) and Toyota Motors Corp. (NYSE: TM) are said to be making history with the first “green bond” of asset-backed securities in the auto industry. Green bonds are securities or contracts where the proceeds are applied exclusively toward projects and activities that promote climate or other environmental sustainability initiatives. Citigroup and 12 other banks introduced new Green Bond Principles earlier in 2014.
Citigroup’s announcement shows that it has now successfully closed Toyota Financial Services’ (TFS) first ever asset-backed green bond issuance — for a sum of $1.75 billion. The deal was also said to be upsized from a prior $1.25 billion benchmark, due to strong investor demand.
This may not be stock-moving news for Citigroup or Toyota, but this could mark the start of a new trend. As newcomers like Tesla Motors Inc. (NASDAQ: TSLA) begin to take increasingly more share from the likes of Ford Motor Co. (NYSE: F) and General Motors Co. (NYSE: GM), you could start to see more green asset-backed securities issued by the auto finance industry.
Toyota said that it plans to use the net proceeds to acquire retail installment sale contracts and lease contracts to finance new Toyota and Lexus gas-electric hybrid or alternative fuel powertrain vehicles. Citigroup has pioneered green bonds as a new asset class in the asset-backed securities market. The process is said to promote the development of the green bond market and help investors evaluate the environmental impact of bonds.
Again, this will not be immediate market-moving news for the auto companies, nor for the banks that promote the offerings. That being said, this should allow more companies to get better financing mechanisms in place for getting their hybrid, electric and alternative energy cars out to the masses.
The Average American Has No Idea How Much Money You Can Make Today (Sponsor)
The last few years made people forget how much banks and CD’s can pay. Meanwhile, interest rates have spiked and many can afford to pay you much more, but most are keeping yields low and hoping you won’t notice.
But there is good news. To win qualified customers, some accounts are paying almost 10x the national average! That’s an incredible way to keep your money safe and earn more at the same time. Our top pick for high yield savings accounts includes other benefits as well. You can earn up to 3.80% with a Checking & Savings Account today Sign up and get up to $300 with direct deposit. No account fees. FDIC Insured.
Click here to see how much more you could be earning on your savings today. It takes just a few minutes to open an account to make your money work for you.
Our top pick for high yield savings accounts includes other benefits as well. You can earn up to 4.00% with a Checking & Savings Account from Sofi. Sign up and get up to $300 with direct deposit. No account fees. FDIC Insured.
Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.
Latest from 24/7
Our expert who first called NVIDIA in 2009 is predicting 2025 will see a historic AI breakthrough.
You can follow him investing $500,000 of his own money on our top AI stocks for free.