S&P Sees Corporate Green Bond Market Surging to $30 bln

Tuesday 24 March 2015

Corporate issuances of so-called green bonds that help pay for environmentally beneficial investments will rise from $19.1 billion raised by companies in 2014, the credit rating company said on Monday. This may be driven in part by growth in China as it looks to boost investment in low-carbon energy and cut pollution.

The entire green bond market reached $36.6 billion in total last year, and may hit $50 billion or even $100 billion this year, the report found, citing estimates from the Climate Bonds Initiative. It’s currently dominated by multilateral banks that last year represented 44 percent of total issuance. Corporate issuance accounted for 38 percent.

China entering the market in “full force” would be a “game-changer” for the green bond market. The nation, which currently has the world’s third-largest overall bond market, led investment in renewable energy last year spending $89.5 billion, according to Bloomberg figures released in January.

While utilities and real estate businesses account for most corporate green bond raises, companies including Toyota Motor Corp., Unilever Plc and the Thai oil company Bangchak Petroleum PCL, all have raised funds through green bonds in the past 18 months, the report said.

Corporate green bonds issued by companies with more than half their exposure to the clean energy value chain reached a record of $18.6 billion last year, according to Bloomberg New Energy Finance.

Of that, the Asia-Pacific region saw the most activity, issuing $9.7 billion, with China-based companies accounting for more than a third. The Europe, Middle East and Africa region issued $3 billion, lower than the $4.7 billion financed in 2013.

This article appeared on Bloomberg New Energy Finance - www.bnef.com

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