Moody’s expects another blockbuster year for the global green bonds market, with total issuance expected to double to more than $200 billion.
Around $208 billion worth of labeled green bonds are expected to be issued this year, a massive increased from $93.4 billion in 2016, Moody’s has suggested. The ratings agency expects the green bonds market to heat up significantly as new issuers enter the market, China will continue to push new, and perhaps larger issues, and commitment to the Paris Climate Change Agreement will keep the flows going.
China, among all factors, will have the greatest impact on the green bonds market. According to Moody’s, $32.9 billion worth of green bonds were attributed to China, which is more than a third of the total 2016 issuance.
Last year, China announced a quota system that 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. This year we may also see the first green bonds being issued from an African country.
However, Moody’s also listed some barriers that may play spoil-sport. The first is easy and obvious — Donald Trump. Some others are the usual ones like lack of transparency, reporting, and standardized definition and framework related to green bonds.
Incidentally, the Climate Bonds Initiative reported that a total of $81 billion worth of labeled green bonds were issued in 2016, compared to $42.2 billion in 2015. The CBI has earlier estimated a total issuance of $100 billion in 2016. Now, it has given a number of $130 billion for 2017.