Companies globally are likely to raise over USD 50 billion through issuance of green bonds in 2016, up from USD 42.4 billion mopped up last year, Moody’s Investors Service said.”In this favourable environment, even after more recent bond market headwinds, and assuming a resumption of the growth rates seen in 2012-14, issuance could exceed USD 50 billion by a significant margin,” Moody’s VP Henry Shilling said.
The USD 42.4 billion green bond issuance in 2015 was also the highest level since such bonds first appeared in 2007.”The regulatory encouragement to issue and invest in green bonds along with the presence of newly issued guidelines for such bonds in China and India will bolster issuance as well,” Moody’s said in a statement.The proceeds are earmarked for a variety of projects, including renewable energy and energy efficiency, financing hybrid and electric automobiles, public wastewater treatment and drinking water projects.
“We expect the momentum from the UN Conference on Climate Change (COP21) as well as the signing of the Paris Agreement scheduled this April to likely motivate additional and repeat issuance of green bonds,” Shilling said.In 2015, 105 distinct issuers came to market with 197 transactions, averaging USD 215 million. Of the total USD 42.4 billion issued, financial institutions were the largest single issuer in terms of type of institution, accounting for about USD 17 billion, or roughly 40 per cent.
Global issuance for green bonds spiked in fourth quarter of 2015, bolstered by active issuance from financial institutions in November just ahead of the start of COP21, reaching USD 15.2 billion, the highest quarterly figure for the year, Moody’s said.