Green bond issuance to top USD 206 bn in 2017: Moody's

Companies globally are likely to raise a record USD 206 billion through issuance of green bonds in 2017, up from USD 93.4 billion mopped up last year, Moody's Investors Service said.

The increase in green bond issuances reflect strong China-based issuances and momentum from the Paris Climate agreement, Moody's Investors Service said.

"Other drivers behind the rise in 2016 and the expected increase in 2017 include geographic expansion; and the rise in issuers, issue types, structures and investment vehicles, including a continuing significant contribution by China, based on its climate commitments and its ambitious renewable energy development agenda," Moody's Senior VP Henry Shilling said.

The market could also be buoyed by public sector measures globally to stimulate green bonds via tax incentives, or similar approaches; and further debate and advances around harmonized reporting and disclosure, including impact, Shilling said.

Moody's expectation of an issuance total of USD 206 billion in 2017 is based on the assumption of another rise of 120 per cent this year, while at least seven other countries have announced, or are reported to be considering, sovereign green bond issuance.

Lead among them is France, which reportedly may issue as much as Euro 11 billion by year-end and has begun to market a Euro 2.5 billion green bond that will be issued by the end of January.

Other potential sovereign green bond issuers include Bangladesh, China, Luxembourg, Morocco, Nigeria and Sweden.

The expansion of green bond types and structures will likely continue in 2017; for example, we could see money market securities in the form of short-term commercial paper, preferred stock, and a variety of structured as well as securitized transactions.

The proceeds from green bonds are used for allocation for renewable energy and energy efficiency projects and climate- change adaption, Moody's said.