Green bond market growing substantially
By James Langton, Investment Executive
May 27, 2015 – The market for “green bonds” has great growth potential as the demand for sustainable investments and the supply from governments and companies looking to finance environmentally conscious projects are on the rise, suggests a new report from Moody’s Investors Service Inc.
The New York-based credit-rating agency says in its report that the growth potential in the market for green bonds, which raise capital for projects designed to combat climate change or enhance environmental, is “considerable as budding U.S. and European markets become more sophisticated and developing countries like India and China explore their use for the first time.”
In fact, the volume of green bonds sold in 2014 tripled from 2013 to almost US$37 billion, the Moody’s report says, citing data from the Climate Bonds Initiative, adding that issuance of these bonds is expected to triple again, to US$100 billion, in 2015.
“Green bond volumes tripled to almost $37 billion year-on-year in 2014 and markets expect issuance to triple again to $100 billion in 2015. However, current standards and levels of accountability remain a concern for investors.” Moody’s Investors Service
“We expect the global green bonds market to continue growing as more issuers with varying credit profiles emerge, especially as countries such as China and India move toward more eco-friendly economies,” says Falk Frey, senior vice president with Moody’s.
As an example, the Moody’s report notes that Yes Bank Ltd., a large commercial bank in India, sold the country’s first green bond in March. Furthermore, the report adds that, at the same time, China’s plan to open its debt capital markets “could increase access to the country’s large domestic savings’ pool and provide transformational opportunities for green bonds.”