Global green bond deals hit a new $100 billion record in the fourth quarter of 2017 and are expected to reach $130 billion by the end of the year (Reuters, 15 Nov): the new record issuance reflects the increasing investor demand for ethically labelled fixed income instruments. According to Climate Bonds Initiative’s data, China was the biggest issuer at over $16 billion in the year to date; followed by France, the United States, Germany. According to the analysis, the number of sovereign bonds issued is also rising, with France becoming the second country to issue one after Poland last year. Fiji has become the first emerging economy to issue a sovereign green bond and Nigeria is expected to be the first African country to issue one in the coming weeks.
This trend may lead to a premium in prices over conventional debt: Lee Cumbes, Head of Public Sector Debt EMEA at Barclays said that “there are signs in the last couple of months that a pricing advantage is beginning to emerge for green bonds”. He added: “Investor demand has really hit us at the back end of this year and that is what’s driving pricing". (FT, 22 Nov).