Another record year for global green bonds?

Global green bonds volume reached another peak during the three months ended September 30, with their strongest quarterly issuance yet of $26.1 billion, says Moody’s Investors Service in a release.

“The volume for the third quarter pushed green bond issuance for the first nine months of the year to $63.2 billion, an increase of 132% from the $27.2 billion issued a year ago,” says Henry Shilling, a Moody’s senior vice-president. “Volume for the first nine months also strongly eclipsed the total of $42.4 billion issued during all of 2015, which was previously the record for annual green bond issuance.”

Shilling predicts, “Should the issuance levels seen in the third quarter be sustained through the end of the year–which is likely given early issuance indicators during the first three weeks of the fourth quarter–the global market stands ready to achieve well over $80 billion in issuance and may approach $100 billion for the year.”

Read: Domestic RI portfolios: are they viable?

Renewable energy and energy efficiency remain the projects of choice, says Moody’s, but the the value of third-quarter issuance dropped in these categories to below 50%. By contrast, allocations to clean transportation, waste management, sustainable waste management and clean water and/or drinking water ticked up, strongly diversifying use of proceeds in the third quarter.

During the third quarter, the number of issuers and transactions declined slightly, while the average transaction size increased, says Moody’s. A total of 50 distinct issuers came to market with 77 transactions–a slight decline from the second quarter’s 54 issuers and 81 transactions.

Meanwhile, average transaction size increased during the third quarter, averaging approximately $337 million per transaction.

The credit quality of green bonds also fell entirely within the investment-grade category, says Moody’s. Ratings were distributed across the range, with:

• 33% rated Aaa;
• 3.8% rated Aa1-Aa3;
• 42% rated A1-A3; and
• 21.6% rated Baa1.

None of the issuances rated by Moody’s fell into the non-investment grade space.

Read: How to capitalize on Trudeau’s carbon tax

Staff

The staff of Advisor.ca have been covering news for financial advisors since 1998.