Green Bonds

Updated: Oct 7, 2020

Global green bond sales are heading for another record year as a flurry of September deals, including Germany’s debut sovereign issue, have roused the market from a lockdown-induced lull, reports Reuters.

Green issues, which source financing for environmentally beneficial expenditures, are crucial to the growing pool of money dedicated to investing sustainably. Sales slumped when the pandemic erupted but are now back on track.

Already worth around $700 billion worldwide, the market’s prospects were boosted this year by the European Union’s 750 billion-euro coronavirus recovery fund. Around a third of it should be financed by green debt, European Commission president Ursula von der Leyen said on Wednesday.

Issuance of EU green debt, which may eventually double the global green bond universe, is yet to start but year-to-date issuance by other borrowers has reached $150 billion, topping that raised by this point last year, according to data from Dealogic.

Most notable was Germany’s debut green bond, the first step towards establishing a pricing reference point for regional borrowers which should entice more borrowers into the market.

Other big names hitting green markets in September were Sweden, JPMorgan, Daimler and Volkswagen.

Joshua Kendall, head of responsible investment research and stewardship at Insight Investment, expects green issuance to surpass the 2019 record of $206 billion -- unless the pandemic slows markets again. Another forecast, by ratings agency Moody’s, says full-year issuance could hit as much as $225 billion.

“Companies are recognising that they had to, maybe, hold off on their plans, but I don’t think there was any concern that it would be a permanent change or an adjustment,” Kendall said.

“The (green) bond market is fairly resilient and companies are very committed to this issue.”

Source: Reuters