- Through the end of September 2019, more than US$189bn in green bonds was raised, beating 2018’s total of US$171bn.
- Companies accounted for 46% of the market through the end of Q3 2019 – a trend which continued in Q4.
- On average, the offerings were reportedly more than three times oversubscribed.
Analysis and Comments
- Green bond issuance has soared globally since 2013, and we expect the growth to continue this year now that the EU has approved its new set of guidelines on what counts as a “green” investment.
- However, with demand for sustainable investments still outstripping supply, investors think that “transition” bonds will also see a meaningful boost in 2020. While controversial, there is an argument to be made for these instruments nudging large numbers of companies into a cleaner direction.
- A transition bond issued by Italian energy group Enel end of last year is reportedly seen as an example for how transition debt finance might develop this year, with the bond not only tied to a clear target, but also including a penalty (in the form of an additional 25bp in interest) if the goal is not reached.
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