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Hello from New York. About $2.6tn of green bonds have been issued by countries and companies all over the world. But the world’s biggest bond issuer — the US government — has been noticeably absent from the green bond party. Is that about to change?

Also today, with renewable power purchase agreements surging, Simon looks at the increasingly urgent debate over how companies should account for them in their books.

Thanks for reading. — Patrick Temple-West

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Sustainable finance Major banks recommend US Treasury issues green bonds

In 1942, Bugs Bunny danced and sang on movie screens to encourage Americans to buy US Treasury war bonds. (The clip of the jingle is here. I won’t judge you for watching it at work, if you don’t judge me for how I procrastinate.)

Irving Berlin wrote Bugs’s song at the request of Treasury secretary Henry Morgenthau Jr as part of a celebrity-soaked propaganda campaign to fund the war. Incredibly, 85mn people — more than half the US population — had bought war bonds by the time the second world war ended.

War bonds were revisited after the 9/11 terrorist attacks when the US issued special “patriot bonds” to fund the war on terror. Clearly, the US has a history of issuing special-purpose debt — typically for war.

Now, Deutsche Bank, Citigroup and other global financial companies have recommended that the Treasury department consider issuing its first ever green bonds. In a report last week, a Treasury borrowing advisory committee comprised of financial companies noted that the US was the only major developed country that had not issued green bonds. The UK, for example, had issued $65bn. 

More than half the US population bought war bonds during the second world war © AP

By issuing green bonds, the Treasury could tap into a pool of investors, such as

Money is drying up for one of the signature US economic development programmes of the Trump administration, as investors balk at inflation, higher interest rates and the looming expiry of a lucrative tax benefit.

Then-president Donald Trump signed so-called Opportunity Zones into law in 2017 as part of broad tax legislation. The zones, which had bipartisan support, were designed to attract private investors to economically distressed areas by allowing them to defer taxes on capital gains.

Investors are now hesitating. Opportunity Zone funds received $229mn in equity investment inflows in the first quarter, down by two-thirds from $682mn the same quarter a year before, according to Novogradac, an accounting firm that tracks the industry. The funds raised $3.5bn in the full year 2023, compared with $9.7bn in 2022.

There are “an awful lot of projects under water right now”, said Robert Hutchins, founder of the New Jersey-based OZ fund Ellavoz Impact Capital. He said he was getting “no less than” 10 calls or emails a week from cash-strapped peers that were “stuck and need more money”, compared with almost zero a year ago.

More than 1,400 opportunity funds have attracted at least $38bn in equity investment, according to Novogradac. They invest in projects ranging from multi-family housing to shopping centres to hotels, and have built up to 700,000 homes since the programme began in 2018.

The programme came under scrutiny early in its life for investing in luxury condominiums and giving tax benefits to the rich without adequately helping low-income communities. Charitable foundations were among the first to back out.

“I don’t think it is a good public policy to craft our tax code around delivering personalised and niche investment vehicles for ultra-high net worth individuals,” said Aaron Seybert, managing director of the Social Investment Practice at the Kresge Foundation, which stopped making new commitments to the programme after providing a $15mn financial guarantee for an OZ fund in 2019.

Stubborn inflation and higher interest rates are to blame for the recent slowdown in funding, industry insiders said, because they burdened opportunity funds with a surge in construction and capital costs.

Robert Silverman, managing partner at LJJ Fund, a New York-based opportunity fund, said the low interest rate environment during the first few years of the programme “fuelled an enormous amount of people entering this space”, as they had access to the cheapest construction loans they had “ever been able to take

British neobank Monzo told CNBC it raised another $190 million from investors including Hedosophia and CapitalG, Alphabet’s independent growth fund. The latest funding boost Monzo’s total funding this year to $610 million and values the business at $5.2 billion post-money. TS Anil, CEO of Monzo, told CNBC his firm plans to use the cash to build new products and accelerate its international expansion plans. Monzo CEO TS Anil.

British neobank Monzo said Wednesday that it’s raised another $190 million, lifting the total it’s raised so far this year to $610 million.

The company told CNBC it raised the cash from new investors including Hedosophia, a backer of top European fintechs including N26 and Qonto. CapitalG, Alphabet’s independent growth fund, also participated in the round.

Singaporean sovereign wealth fund GIC also participated in Monzo’s latest fundraise, a source familiar with the matter told CNBC. The source spoke on the condition of anonymity as details of GIC’s involvement aren’t yet public.

GIC declined to comment.

The latest funding values Monzo at roughly $5.2 billion, an increase on the $5 billion valuation it attained in March when it raised $430 million. The total $610 million round marks the single-biggest funding round for a European fintech in the past year, according to Dealroom data.

TS Anil, CEO of Monzo, told CNBC his firm plans to use the cash to build new products and accelerate its international expansion plans.

“At the heart of it we are a mission-oriented company that’s looking to build the single place where people can meet all of their financial needs,” Anil told CNBC in an exclusive interview.

“What’s exciting to me is that, as we pursue that mission of changing people’s relationship with money, we’ve built a business model that is congruent with that as well, with this model that is built entirely around the customer.”

Monzo entered the black for the first time last year, hitting profitability following the end of its 2023 fiscal year. Anil said Monzo’s looking to ramp up profits with diversification into other income generators, like lending and savings.

Notably, Anil said that Monzo’s planning to launch its first pensions product in the next six to nine months.

That would put it in competition with traditional lenders including Barclays

CNBC