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Total value of green bonds to top $1 trillion by late summer 2020

By Francis Jay

Green bond market continues to grow, with Europe being the most active issuer

Worldwide demand for green bonds is growing and their total value will top $1 trillion by the end of next summer, according to a new report.

An estimated $240 billion (£186 billion) is likely to be issued worldwide by the end of 2019, according to a survey byNordic corporate bank SEB. It says that in total there are currently around $800 billion of green bonds issued.

Europe is the most active issuer of green bonds, but Asia has had strong recent performance, and China is a large and growing market.

The first weeks of October have been strong with total issuance of $9.5 billion. This has brought total issuance in the year to date up to $189.5 billion, which is higher than the total volume for 2018 ($183 billion).

While the green bond market has shown tremendous growth over the past few years, it still remains a small part of the total bond market. However, in Sweden green bonds accounted for as much as 21 per cent of all new bond issues in 2019.

“Renewable energy supply continues to generate positive headlines and symbolic victories,” the report states. “One such symbolic milestone was reached in the UK in Q3, when electricity generation from renewable energy surpassed that of fossil fuels for the first time since the start of electrification in the 1880s.”

Similar achievements have been reached in other developed economies, and oil, gas and coal consumption has also been falling in recent years in the OECD area, where total energy consumption has been levelling off over the past decades.

Europe (excl. Nordic) continues to be the most active region of the market, with green bond issuances of $9.4 billion in September. The Asian region continued its strong performance from July and August with total issuance of $8.0 billion in September. This was primarily due to financial sector issuances across China and Japan accounting for $6.3 billion, or more than 80 per cent of the total for the region.

The United States had issuances of $6.8 billion in September, primarily by Fannie Mae, which issued $4.2 billion worth of mortgage backed securities. The Nordics continued to be a relatively stable issuer region with issuances of $1.8 billion in September, evenly split between 18 issuers across the government agencies, financials, corporate and municipal sectors.

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