Green bond market breaks through $150bn barrier

Channels: Green Bonds

Companies: Greenko, Asian Development Bank, Bank of China, European Investment Bank, World Bank, Vasakronen, EDF

The total amount of capital raised by green bonds has surpassed $150 billion, as the rapidly evolving market continues to set new records.

The landmark was achieved on 16 August when a series of bonds settled – a $1.3 billion issue from the Asian Development Bank, a $500 million issue from Indian power company Greenko, and a $437 million issue from the City of Aurora in the US, according to the Green Bond Database published by Environmental Finance.

Although the amount raised by the market since its inception in 2007 has topped $150 billion, the value of total outstanding green bonds is slightly lower, at $143.45 billion, because some of the previous green bonds have matured.

Of this figure 42% or $62.23 billion were issued by sovereign supranational and agency issuers, with banks representing the second largest portion at $23.3 billion.

 

At $54.2 billion, this year's issuance so far has already surpassed last year's record breaking $44.5 billion. The market is, according to some commentators, still set to see $100 billion of issues this year.

This year's strong growth is, in part, thanks to an influx of Asian issuers that increased as a proportion from 5% in 2015 to over 30% of total issuance in the year-to-date.

China in particular has dominated issuance this year, launching four of the five largest green bonds ever issued, including Bank of China's $3.03 billion inaugural issue.

The green bond market was launched in 2007 when the European Investment Bank issued the first of its Climate Awareness Bonds. This was followed by a 'green bond' from the World Bank.

It was not until 2013 that the market's growth gathered pace. There was $11.4 billion of issues in 2013, followed by $33.8 billion in 2014 and $44.5 the following year.

For years, the market was dominated by the multilateral development banks. It was not until 2013 that the market saw its first corporate issues, from Vasakronen and EDF, and more recently private banks that have been underwriting bonds have also started issuing their own notes.

Peter Cripps, Hamza Ali