The Green Bond Market in Europe

The Green Bond Market in Europe

The Climate Bonds Initiative just released a new report examining the latest green bond market developments in Europe both at a regional and country level.

Sponsored by White & Case, the report is the latest in the new 2018 series of Overview and Opportunities-based analysis following the Green Bond Opportunities in France report published in April.
 

Download the full report here.

 

Europe at the forefront of green bond issuance

The first green bond issuance was issued in 2007 by the European Investment Bank to raise funding for climate-related projects. Europe has remained a cornerstone in the global green bond market, with cumulative issuance totalling EUR122bn, representing the largest regional market.

European issuers span the continent and the spectrum of issuer types. 145 entities have come to market, or around a third of the global total. They have issued in a variety of debt formats, currencies and tenors. Sector diversity has grown over time. 98% of issuance benefits from external reviews and reporting standards are high.

 

The European green bond market is diverse

Issuers as of end of Q1 2018 include 48 companies in the energy sector, 35 financial institutions, 23 property companies, 17 local governments and three sovereigns. The 7 debut issuers from 2018 and 48 from 2017 have already contributed over EUR34bn to the market: half of that linked to sovereign issues from France and Belgium.

Diversification to date is a big accomplishment but it would be good to see more corporate issuance, especially from countries with large economies and highly-developed and active bond markets such as the UK, Germany and France.

 

Energy at top spot for allocations, but falling in mix

European issuers have always allocated a substantial part of green bond proceeds to the energy sector.  However, the share of Energy in the overall mix has dropped in recent years as the amounts channelled towards Buildings and Transport have risen.

Belgium’s green sovereign OLO allocates 85% of proceeds to rail investments, echoing a 2017 trend: French, Spanish and Italian government-backed rail companies tapping the green bond market in size. With big plans to upgrade rail transport across Europe, we would expect to see Transport pull further ahead.

Download the full report here.

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