Global credit rating agency Moody’s expects a significant shift in the global green bonds market.
Following the trend of faster growth in renewable energy capacity addition in developing countries, the global green onds market is also expected to see greater participation from developing economic like China and India, according to a recent report by Moody’s.
Moody’s has projected that the total green bonds issuance is expected to exceed $40 billion for this year. At the end of Q3, the total issuance stood at $27.2 billion.
Giving a summary of the Q3 performance of the global green bonds market, the ratings firm highlighted the fact that several new players entered the green bonds market in Q3. The first green bond in China was issued by wind energy firm Xinjiang Goldwind Science & Technology in July. The bond issue attracted huge interest from investors and was oversubscribed by 4.6 times. Q4 has also a good start, with Agriculture Bank of China becoming the first bank in the country to issue green bonds, and raising close to $1 billion.
Moody’s also highlighted the increased issuance of bonds from companies and banks in India. A private wind energy company, CLP India, raised funds in July. Yes Bank issued India’s first green bond in February this year. The Export-Import Bank of India also issued the first dollar-denominated green bonds earlier this year. The Indian government has directed several public and private sector companies to issue bonds; some of them are expected to be used solely to increase renewable energy capacity in the country. These include bonds issued by the Indian Renewable Energy Development Agency (IREDA).
“We expect India, along with China, to be a prominent driver of regional issuance in coming years, given ambitious targets on building out renewable energy capacity,” said Henry Shilling, a Moody’s Senior Vice President.
Both, India and China have some of the largest capacity addition targets in the world. China plans to have 150 GW installed solar power and 200 GW worth of wind energy capacity by 2020, while India is targetting 100 GW installed solar power and 60 GW installed wind energy capacity by 2022.