Green bond issuance hits record high this quarter

According to Moody’s Investors Service, the green bond market has hit an all-time high this quarter, with issuers bringing $66.6bn to market throughout the world. This brings the total green bond issuance figure to $117bn for the first two quarters. This first-half issuance is 47 per cent higher than the first-half issuance figures for 2018. These figures put the green bond market ahead of Moody’s forecast of $200bn total in green bond issuance over the entire year, assuming the market continues along the same course in the second half of the year.

The strongest contributors in green bond issuance this quarter were corporates who accounted for 22 per cent of non-financial corporate issuance with $14.9bn, and 20 per cent of financial corporate issuance with $13.6bn. European issuers made up the majority of green bond issuances with 54 per cent of total issuance, due in large part to a $6.7bn green bond issuance from the Government of the Netherlands.

Due to the significant increase in these figures, some are beginning to inspect the conditions of green bonds more closely. Some have drawn attention to the lack of regulation in the green bond market. Currently, there are only guidelines from the International Capital Market Association. The Climate Bonds Initiative however, is in the process of developing a climate and green bond standard, to assist investors and governments in green bond issuance and investing. In June, a Technical Expert Group established by the European Commission, published a report proposing that the Commission create a voluntary, non-legislative EU Green Bond Standard to enhance effectiveness, transparency, comparability and credibility of the green bond market, with the aim of increasing EU green bond borrowing and investment. While standards and regulations are yet to be seen, it is clear that if the record issuance levels continue along their current trajectory, borrowing for further green projects is to be expected.

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