With the effects of climate change getting obvious in many places around the world, the need for financing green projects is urgent now more than ever. Under these circumstances, green bonds become a new investment instrument to attract capital for sustainability projects. However, the valuation for these assets is vague because it lacks consistency in green bond principles, standard tools and techniques for determining their value.The purpose of this paper is to closely examine the Apple’s first green bond and its comparison to its corporate and US Treasuries bond.
Table of Contents
1. INTRODUCTION
2. AN OVERVIEW OF THE GREEN BOND
2.1. DEFINITION AND TYPES OF GREEN BONDS
2.2 GREEN BOND PRINCIPLES (GBP)
2.3 THE EVALUATION TOOLS FOR GREEN BOND
3. APPLE ‘S GREEN PROJECTS
3.1 DATA
3.2 APPLE GREEN PROJECTS
3.3 EVALUATION OF GREEN BOND AND COMPARISON WITH OTHER BONDS
4. CONCLUSIONS
Research Objectives and Focus
The primary objective of this paper is to evaluate the Apple green bond by analyzing its market performance and characteristics through a comparison with standard corporate and government bonds of equal maturity, utilizing the Present Value Technique to assess attractiveness.
- Fundamentals and assessment methodologies of green bonds (Moody’s/S&P).
- Detailed case study of Apple’s green bond issuance and its specific project financing.
- Financial valuation and comparative analysis (yield, duration, and convexity).
- Evaluation of corporate transparency and environmental impact reporting.
Excerpt from the Book
3.3 EVALUATION OF GREEN BOND AND COMPARISON WITH OTHER BONDS
In this part, the value of the Apple green bond is studied based on present value approach in practice. To simplify the analysis, it is assumed that an investor takes into consideration investing in bond market. He is offered three types of bonds: a green bond, a corporate bond and a T-Bond. These bonds have same term to maturity and currency. To assess and compare the bonds, the yield, duration and convexity of each bond are analyzed.
The value of a bond is defined as “the present value of the expected cash flow on that bond, discounted at an interest rate that reflects the default risk associated with the cash flow”. It is affected by three factors: The present value of a bond with maturity in N time is given:
Summary of Chapters
1. INTRODUCTION: This chapter highlights the rising importance of green bonds in the context of climate change and outlines the analytical framework used to study Apple's green bond issuance.
2. AN OVERVIEW OF THE GREEN BOND: This section provides definitions and types of green bonds, details the Green Bond Principles (GBP), and explains evaluation tools provided by Moody’s and S&P.
3. APPLE ‘S GREEN PROJECTS: This chapter presents the data, provides a comprehensive overview of Apple’s green initiatives (like the Liam robot and green campuses), and performs a technical financial evaluation compared to other bonds.
4. CONCLUSIONS: The final chapter summarizes the findings, noting that while green bonds function like normal corporate bonds, they provide essential diversification and transparency benefits, though unallocated funds remain a point for investor scrutiny.
Keywords
Apple, Green investment projects, Green bond, Bond evaluation, Sustainable finance, Present Value Technique, Climate change, Renewable energy, Financial market, Corporate bond, US Treasury bond, Yield, Duration, Convexity, Transparency
Frequently Asked Questions
What is the core subject of this paper?
The paper focuses on the valuation and analysis of green bonds as a financial instrument, specifically using Apple's green bond issuance as a primary case study.
What are the central themes of the research?
The central themes include the mechanics of green bonds, the application of sustainability reporting standards, and the financial comparison of green bonds against traditional corporate and government bonds.
What is the primary goal of this research?
The primary goal is to examine the valuation of the Apple green bond by comparing its financial performance, such as yield, duration, and convexity, against a corporate bond and a US Treasury bond with the same maturity.
Which scientific methods are applied?
The author employs the Present Value Technique and analyzes financial metrics including nominal yield, current yield, yield to maturity (YTM), duration (Macaulay and modified), and convexity.
What topics are covered in the main section?
The main section covers the definition of green bonds, the Green Bond Principles, methodologies for scoring green bonds, an in-depth look at Apple’s green projects, and a technical financial comparison of the chosen bonds.
Which keywords characterize this work?
Key terms include Apple, green bond, sustainable finance, present value technique, bond evaluation, and climate change.
How does Apple use its green bond proceeds?
According to the report, Apple uses the revenue to support renewable energy programs, improve energy efficiency in its buildings, and conduct research into eco-friendly materials.
What conclusion does the author reach regarding green bond transparency?
The author concludes that while Apple provides detailed information and hires external reviewers, the existence of unallocated funds raises questions for investors, indicating a need for even clearer project selection and management disclosures.
What role does the 'Liam' robot play in Apple's green strategy?
The Liam robot is designed to disassemble iPhone 6 units to recover materials, serving as a key project in Apple's effort to 'green' its manufacturing operations and conserve natural resources.
- Quote paper
- Hong Hanh Tran (Author), 2017, Green, Greener, Green Bond, Munich, GRIN Verlag, https://www.grin.com/document/427696
