Explosive growth in green bonds market
Turning point in market growth came with the first corporate green bonds in November 2013, which pushed the market size for 2013 to $11bn. The market trebled in size in 2014 with $36.6bn issued and we expect $100 bn issuance in 2015.
Data as of 31st Dec 2014
Issuing organisations follow in footsteps of World Bank and EIB
In 2007 the green bond market kicked off with AAA investment grade issuance from multilateral institutions European Investment Bank (EIB) and World Bank. The wider bond market started to react after the first $1bn green bond sold within an hour of issue by IFC in March 2013. The following November there was a turning point in the market as the first corporate green bonds were issued by EDF, Bank of America and Vasakronan. Corporate issuance continued to flow this year with the largest to date from GDF Suez at EUR2.5bn ($3.44bn) in March 2014.
High yield green bonds are starting to develop. Abengoa Greenfield, a Spanish renewable energy services company, successfully issued the first high yield green bonds in September 2014. We expect to see more issuances from companies with diverse credit stories as the market develops.
Municipal and local government green bonds are a growing trend. The first green muni bond was issued by Massachusetts in June 2013. Gothenburg in October 2013 issued the first Green City bond. In Q3 2014 the state of California issued its first green bond. Province of Ontario, New York State, City of Johannesburg and others have also issued green bonds.