January 30, 2018 Read More →

Report: Green Bond Market Will Grow by 30% in 2018

The Star Online (Malaysia):

S&P Global Ratings said that strengthening green bond market fundamentals are likely to fuel about a 30% increase in self-labeled instruments globally in 2018.

In a report published on Tuesday entitled, “Green bond issuance is expected to shoot up further,” it said that would push issuance to around US$200bil for the year.

That compares to issuance of US$155bil in 2017, up from a mere US$13bil in 2013, according to the Climate Bonds Initiative.

“The green bond market has grown by 80% a year over the past five years, demonstrating rapid development of new green markets, combined with the continuous and global political push to address climate change,” said S&P Global Ratings credit analyst Noemie De La Gorce.

She said while S&P expects this growth will slow down in 2018, she believes solid market fundamentals may drive the expansion of the green bond market to new types of issuers, geographies, and financing types.

“We expect to see new issuers getting involved with new forms of financing vehicles such as green loans, green funds, and green structured products. We also anticipate new issuances of green Islamic bonds (so-called green sukuks) following the first US$58mil issuance by the Malaysian company Tadau-Energy in September 2017.

“Low-carbon technologies in the energy, transport, and buildings sectors are likely to remain the main beneficiaries of green investments, reflecting the importance of emissions reductions in these sectors in the fight against climate change,” she added.

In the U.S., the self-labeled green bond market more than doubled in 2017, driven largely by states, municipalities, and corporates, despite volatile federal climate policies.

Emerging markets are also likely to maintain their involvement in the market, led by China, India, and Mexico. The contribution of those three countries to global labeled green bond issuance rose significantly over the last two years, to 20% in 2017 from 7% in 2015.

Last year’s largest issuers included the Bank of Beijing (US$5bil), the Indian energy company Greenko (US$1bil), and Mexico City Airport (US$4bil).

More: Global green bond issuance to hit US$200b in 2018, says S&P

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