Global issuance of green bonds could reach a record $50bn in 2016, beating last year's record by around $8bn, influential ratings agency Moody's said in a report released Monday.
Further support for the fast expanding market will come be driven by continuing institutional, high net worth and retail investor appetite for green bonds, Moody's said, while regulatory encouragement and newly issued guidelines for green bonds in China and India is also expected to bolster the level of issuance.
Henry Shilling, a Moody's senior vice president, said "momentum" from the UN climate change talks and the signing of the Paris Agreement set for this April is likely to further boost additional and repeat issuance of green bonds.
"In this favourable environment, even after more recent bond market headwinds, and assuming a resumption of the [high] growth rates seen in 2012-14, issuance could exceed $50bn by a significant margin," he said in a statement.
In particular, this year could see China's green bond market expanding rapidly compared to internationally designated green bonds due to central bank policy support and incentives for financial institutions, such as relending and interest subsidies - terms generally not available in other countries.
Looking back at last year, Moody's noted that global issuance of green bonds spiked to $15.2bn in the fourth quarter of 2015, due to financial institutions more actively issuing green bonds just ahead of the Paris climate talks in December.
In related news, a member of the European Investment Bank (EIB) has warned the UK could risk losing out on billions of pounds in renewable energy investment if it decides to leave the European Union.
In an interview with Bloomberg, Peter Munro, head of investor relations for the bank, said it is unclear if Britain would still receive EIB funding in the case of Brexit. However, Munro added access to funding would depend on a raft pof variables, including whether other member states would allow the UK to remain a stakeholder and whether the government decided to retain its involvement in the EIB.
"If you're not a shareholder or you're not part of the EU, you wouldn't derive the same privileges as a shareholder or an EU member," Munro told the news agency.
Britain has received 24 per cent of the €7.2bn invested by the EIB's Climate Awareness Bond Project in renewable energy and energy efficiency developments since 2007, according to the EIB, while countries outside the EU have received only 12 per cent of the funding.
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