Labeled Green Bonds Issuance Doubled To $81 Billion In 2016

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2016 was the best year for the global labeled green bonds market as it saw the largest-ever issuance.

According to the Climate Bonds Initiative, a total of $81 billion worth of labeled green bonds were issued in 2016, a massive surge from the total issuance in 2015 of $42.2 billion. This jump was on expected lines as analysts had predicted significant thrust from the developing markets like India and China. The Asian countries, especially China, contributed immensely in terms of first-time issuers.

The scale of the rapid expansion of the labeled green bonds market can be gauged from the fact that Climate Bonds Initiative reported a total issuance of $2-3 billion in 2012 while the lowest monthly issuance of green bonds in 2016 was $1.2 billion.

This highest monthly issuance in 2016 was in November with $11.84 billion, and this was also the highest monthly issuance ever.

Labeled green bonds are defined as those which are aligned with the definitions laid down by the Climate Bonds Initiative. Of the $81 billion worth of bonds, Climate Bonds Initiative had itself certified bonds worth $6.7 billion.

The sharp increase in issuance has been driven by exiting market leaders as well as emerging players. World Bank, the International Finance Corporation, European Bank for Reconstruction and Development, and European Investment Bank are some of the well-known and leading issuers of green bonds this year.

Several new entrants from developing economies also issued large green bond issues this year. These include Hero Future Energies, Axis Bank from India, and China Industrial Bank, Bank of Qingdao, and Xinjiang Goldwind from China.

Some leading private sector companies also issued green bonds. These include Apple, Toyota, Hyundai Capital Services, and Iberdrola.

China and India issued specific guidelines regarding the issuance of green bonds. While China announced a quota system assigned green bond issuance targets to a number of government-owned entities, India also directed a number of public sector entities to tap the global green bonds market to accumulate funds to finance the ambitious renewable energy targets.

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