Green bond issuance is set to reach $200 billion in 2019: Moody’s

Global green bond issuance will grow by 20% to reach $200 billion in 2019, according to a new report from Moody’s Investors Service. Despite slower growth in 2018, a number of supporting factors suggest growth in 2019 and beyond. A broader focus on sustainability will also drive growth in social, sustainability and other labeled bonds.

“After a slow 2018, green bond issuance will grow more rapidly in the year ahead,” says Matthew Kuchtyak, a green bonds analyst at Moody’s and the lead author of the report. “We continue to see a number of factors supporting the long-term growth of the sector, including more active participation from US non-financial corporates.”

The utilities sector, for example, is expected to see a 30% increase in maturities in 2019, which could provide an opportunity for more green bond refinancings.

Investor demand for green and sustainable investment products continues to grow and far outpace the supply of such bonds, according to the report. In addition, heightened commitment to addressing climate change will drive growth as governments increasingly seek to finance climate mitigation and adaptation projects with green bonds. A growing number of repeat green bond issuers, which account for three-quarters of total issuance in value terms, also bodes well for sustained market growth.

As the green bond market matures, Moody’s expects continued diversification in issuance in terms of sector, region and use of proceeds. In addition, greater clarity around global green bond standards could help more precisely define which projects qualify as “green” and help grow the market over the long run.

The report notes a rise in the issuance of other types of thematic fixed-income instruments alongside the growth of the green bond market, and the increased use of the UN’s Sustainable Development Goals as a means of aligning financial investments with long-term environmental and social objectives. Broader adoption of these goals could further expand the pipeline of sustainable investment products globally.