After a record-breaking issuance last year, the international green bonds market is set for a new record this year.
According to TD Securities, the total issuance of green bonds this year would touch $160 billion. This would mark a 34% increase in issuance from TD Securities’ 2017 issuance estimate of $119 billion.
“The sector has experienced extremely strong growth over the past several years as funds with socially responsible mandates continued to chase scarce supply,” TD analyst Gennadiy Goldberg.
While the United States remains one of the largest markets in the green bonds market, the current administration has expressed its opposition to the Paris Agreement, yet the global issuance would continue to increase, analysts at TD Securities expect. Municipalities and cities led in green bond issuance last year. If even this trend declines, the European Union is expected to see continued growth, while China and India have lined up government-backed bonds.
Climate Bonds Initiative CEO Sean Kidney has a more optimistic view of this year’s issuance total. Kidney expects at least a 60% jump over last year’s issuance, taking the 2018 total to $200 billion. Kidney sees substantial growth in corporate green bonds as companies feel the pressure to transition to low-carbon operations.
The Climate Bonds Initiative reported $120.2 billion worth of green bonds issued in 2017, an increase of 48% over the previous year’s issuance. The tally does not include $10.2 billion worth of bonds issued by Chinese entities that do not fit the definition of green bonds given by Climate Bonds Initiative.
Confidence among investors would likely come from the large sovereign green bonds issues being planned by governments and government-owned entities. The governments of Poland, France, and Fiji issued green bonds last year, while Nigeria became the first African country to issue a sovereign green bond.