Global green bond market tipped to reach US$100bn in 2017, with China seen maintaining its lead
Global issuance of green bonds could expand more than 20 per cent to US$100 billion in 2017 after almost doubling this year, with China expected to maintain its global lead in the sector, according to deal arrangers.
“We expect China’s green bond market to keep growing with an estimated issuance of US$30 billion next year, and a strong increase in corporate issuance is expected,” Benjamin Lamberg, global co-head of medium term notes and private placements at French-based Credit Agricole CIB, told the South China Morning Post, adding that he expects next year’s global total to reach US$100 billion.
Green bonds, which finance carbon emission reduction and climate change impact mitigation initiatives, are a relatively young but fast growing fund-raising tool.
Global issuance surged from around US$12 billion in 2013 to US$42 billion last year after minimal volumes were recorded between 2007 and 2012, according to a report by Bank of America Merrill Lynch, another major green bond issuer.
“The green market started in 2006 with only about US$1 billion of issuance by some supranational bodies such as the World Bank,” Lamberg said. “It started as a marketing strategy as if a bond packaged into a green bond would make it easier to sell. Nowadays, the green bond market has become mature and it is not about marketing anymore.”
Bankers said more issuers have realised the commercial benefits of green financing, even as green bonds have been generally priced in line with comparable non-green issuances, although the issuers must bear some additional set up and assurance costs.
