Fund Buyer Index

Experts upbeat on green bond market

Posted in Feb 2019
by Joe McGrath

A record $17.2bn (€15.2bn) of green bonds were issued in January 2019, up 17 per cent on the same month in 2018, new data from Nordic bank SEB shows.

Supranationals were the main issuers during the month, according to the report, followed by corporates, financials, municipalities and securitisations.

“The green bond market kicked off the New Year with both dynamism and endurance,” said Christopher Flensborg, SEB’s head of climate and sustainable financial solutions.

“This drive has continued into the first week of February, with almost $25 billion year to date, on a trajectory consistent with our scenarios for 2019. We expect the market to grow to $210-240 billion this year.”

Flensborg’s upbeat predictions were echoed by a report released on Wednesday by Axa Investment Managers. The Axa report recognised that issuance fell short of industry predictions in 2018, but predicted that the market would bounce back in 2019.

“Compared with 2017, green bond issuances were stable last year and bid to cover remained quite high, showcasing the demand for this asset class, even in turbulent markets,” said Johann Ple, a portfolio manager at AXA Investment Managers.

“New issuers increased by 45% over the course of 2018, and, among these, were new sovereign issuers including Indonesia, Ireland, Belgium.”

Ple said that 2019 would likely see further new issuers emerge, adding that green bond frameworks are developing with the market witnessing improved reporting.

“We believe 2019 could see new sovereign issuers such as the Netherlands join the green bond market, and this combined with many new corporate sector opportunities such as automobiles or telecommunications, could provide a strong driver for growth this year.

“Green bond frameworks are improving, with issuers providing stronger reporting and greater transparency regarding their management of proceeds.”

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