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Global green bonds issuance dropped 11.5 per cent in Jan-Mar 2018

New Delhi: The issuance of green bonds at a global level declined 11.5 per cent in the first three months of 2018 with only $30.4 billion of green bonds brought to the market, as compared to the same period last year, international credit rating agency Moody’s said. 

The bond issuance during the first quarter was around half of what was needed to keep the market on track and to achieve the projected $250 billion of total green bond issuance globally in 2018. "While first quarter volumes suggest a slower pace of market growth, broader fixed income market conditions may have contributed to the decline in green bond issuance," said Matthew Kuchtyak, an analyst at Moody's.

He also said most sectors globally saw a material decline in overall bond issuance during the first quarter of 2018. Despite the dip, many developments point to a strong second quarter. “Second quarter issuance got off to a quick start in April with a number of significant transactions including a €1.1 billion issuance from the Government of France, a €750 million issuance from ABN AMRO Bank NV and €500 million issuances from Berlin Hyp AG and BNP Paribas,” Moody’s said.  

Sovereign green bonds dominated the mix during the first quarter after the Belgium government debuted with a green bond for €4.5 billion. The transaction represented the second largest sovereign green bond to date behind France's maiden green bond in 2017. The Poland government brought its second green bond to market, a €1 billion tranche, and the Indonesian government issued the first sovereign green sukuk for $1.25 billion.

Other notable developments related to the green and sustainable bond sectors include the launch of the Green Bond Pledge initiative, the announcement of green bond guidelines in Peru and the launch of the Sustainable Blue Economy Finance Principles. In addition, multilateral agencies continue to support green bond issuance in emerging markets.

The report stated that the spectre of higher interest rates may continue to suppress issuance volumes, but there are signs that green bond volumes will be stronger in the second quarter. Issuance has rebounded in April, according to market participants, with a number of significant deals coming to the market.

The money raised by the global green bond is earmarked towards financing `green' projects, assets or business activities that are environment-friendly.