Record $56 Billion Green Bonds Issuance Witnessed In H1 2017

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The global green bonds market has scored yet another record issuance during the first half of 2017. A record $56 billion was issued during the first six months of the year while the second quarter saw issuance of $30 billion, the Climate Bonds Initiative reported.

According to the data released by the Climate Bonds Initiative, green bond transactions constituted 3% of the total bond transactions globally during the first half of the year. Interestingly, governments overtook multilateral banks to become the largest issuers in H1 2017.

The government of France is the largest issuer so far, having floated bonds worth $7.6 billion. The European Investment Bank and German development bank KfW issued bonds worth $2.8 billion and 2.5 billion, respectively. The overall issuance from France, including the government and private institutions, is close to $12 billion, or a fifth of the total green bonds issuance, for the first half.

United States and China have seen issuances worth around $9 billion and $8 billion, respectively, indicating a shift in the once EU-dominated green bonds market. The top 10 countries in terms of issuance have only two developing countries — China (around $8 billion) and Brazil (around $2 billion), contributing less than a fifth of the total issuance. 

First-time issues of green bonds were seen from Argentina, Slovenia, Singapore, and Switzerland and the trend is expected to continue with several countries in Africa looking to take the market. Kenya and Nigeria are planning to launch sovereign green bonds while project-linked bonds are being issued in Morocco.

The green bonds market in the United States is driven by municipalities. The total issuance from the United States in H1 2017 stands at around $5 billion, with 56% of this coming from municipalities. Climate Bonds Initiative expects the total issuance from the United States could touch $10 billion this year.

The Climate Bonds Initiative estimates that a total of $130 billion worth of green bonds would be issued in the current year. This will be a huge jump from the just over $80 billion issuance of last year. Even if the market grows linearly, the total issuance this year would cross $110 billion and breach the $100 billion mark for the first time ever. If China does not increase issuance, the final figure for the year would be close to estimate of $130 billion. Increased action from Chinese government institutions and corporates could push the issuance total to around $145-155 billion.

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