Green Bonds Worth $30 Billion Expected This Year

The growth rate for the global green bonds market is expected to remain stable as investors become more concerned about issues like sustainability and climate change.

Ratings firm Standard & Poor’s has forecast green bonds worth a total of $30 billion could be issued in 2015 as development banks and large companies would look to increase investments into renewable energy and energy efficiency projects. In 2014, green bonds worth $35 billion were issued, nearly three-times the value of green bonds issued in 2013.

This expected development in the green bonds market is in line with the expectations of various experts who see the global green bonds market at $1 trillion by 2020. At a forum discuss on the sidelines of the Abu Dhabi Sustainability Week 2015, Karim Nassif, Associate Director – S&P, UAE, said that the green bonds market would soon cross the $100 billion market as emphasis on sustainable energy. But in order to achieve this scale-up, regulatory support by governments would be required. Regulatory clarity would attract first-time investors and enhance confidence of existing investors. Clarity on the certification of green bonds proceeds will also be critical, as assurance services for validation of investments made by green bond issuers are likely to gain immense importance.

Growth is expected to be driven by new and small players entering into the market. National and development banks are expected to issue green bonds in the near future. Emerging markets like India, China, and North Africa would be markets to watch.

Among the major green bond issues seen this year one of the most significant was the bond issue by Yes Bank in India. The private sector bank issued India’s first green bond and had planned to raise $75 million but instead raised around $150 million. The proceeds from this bond issue would be used to provide debt financing to 5 GW of renewable energy capacity in India.