Green bond issuance set to surprise

14 Dec 2018

The green bond market is set for a strong 2019, a Nordic bank believes.

SEB expects around $210bn to be raised from such paper in the coming 12 months, beating the $180bn that was issued in the first 11 months of 2018.

Yet the bank believes that the market has the potential to beat its expectations by generating up to $240bn. This could be the result of the increasing scale of the world’s green infrastructure investment pipeline and issuers joining the market from new sectors and geographies.

Incentives offered by some governments could also stimulate growth.

So companies needing to fund their sustainable strategies and investors looking to make an environmental or sustainable impact will drive momentum in this market.

Issuers in 2019 are expected to be sovereigns, local government, state-owned agencies and corporates.

Financial companies were a driving force behind the market in 2018 issuing $63bn. This year, SEB believes the sector will continue to be a strong player by raising between $67bn to $72bn in in the next 12 months.

Next year is expected to welcome a first for the green finance market. The bank believes that the debut Green Collateralised Loan Obligation, where debts are packaged together and sold to investors, could be launched in 2019.

There is one cloud on the horizon. SEB warns that if the global economy falls into recession in 2019, it could hit sentiment for green projects and therefore their options to raise funding.

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