Global Green Bonds Issuance To Exceed $40 Billion This Year, Moody’s Reports
Global credit rating agency Moody’s expects volume in the global green bonds market to increase significantly towards the end of the year to coincide with the UN’s global climate change conference in Paris next month.
Moody’s, in a recent report, stated that the green bond issuance in the third quarter of the year had declined substantially, but is expected to pick up in the last quarter and exceed $40 billion. Compared to a cumulative issuance of green bonds worth $13.4 billion in Q2, bonds worth only $7.6 billion were issued in the third quarter. The total issuance in Q1 was $6.3 billion.
According to the firm, at the end of Q3 the total green bonds issuance had reached $27.2 billion. Based on the 9-month average monthly volume, the full year issuance may reach $36.2 billion. However, companies and public institutions may make fresh announcements around the COP21 meeting. Moody’s expects that such announcements would help take the green bonds tally for the year to over $40 billion.
Giving a break-down of how the proceeds from the Q3 bonds would be used, Moody’s stated that more than half of the funds raised, or about $4 billion, would be used for renewable energy projects, while less than a fifth each would be used for sustainable water management and energy efficiency projects.
The Climate Bonds Initiative, which issued its own analysis on Q3 bonds issuance, stated that bonds worth $6.9 billion were given during the quarter, with year’s largest issue of $1.1 billion issued by NWB Bank in the last quarter. While the agency, too, noted that overall issuance fell in Q2, it highlighted that the average size per issuance increased from $144 million in Q2 to $204 million in Q3. The Climate Bonds Initiative also issued ranking of underwriters for the bonds issued during Q3. JP Morgan topped the ranking, underwriting bonds worth over $1.1 billion. In year-to-date, Bank of America Merrill Lynch leads with underwriting for over $3 billion worth of bonds.
The small difference in figures mentioned by Moody’s and the Climate Bonds Initiative is due to the different criteria the agencies adopt while defining green bonds. Some agencies include only labelled bonds while others include labelled as well as non-labelled bonds in their analysis.
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