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Global green bond issuance expected to spike by 30% in 2018: S&P Global Ratings

GLOBAL green bond issuance is expected to shoot up by 30 per cent in 2018, bolstered by strengthening fundamentals, according to a report by S&P Global Ratings on Tuesday.

This would push issuance to around US$200 billion for the year. That compares to issuance of US$155 billion in 2017, up from US$13 billion in 2013, according to the Climate Bonds Initiative.

"The green bond market has grown by 80 per cent a year over the past five years, demonstrating rapid development of new green markets, combined with the continuous and global political push to address climate change," said S&P Global Ratings credit analyst Noemie De La Gorce.

Solid market fundamentals may drive the expansion of the green bond market to new types of issuers, geographies and financing types, she added.

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S&P expects to see new issuers getting involved with new forms of financing vehicles such as green loans, green funds and green structured products.

It also anticipates new issuances of green Islamic bonds - or green sukuks - following the first US$58 million issuance by the Malaysian company Tadau-Energy in September 2017, she said.

"While the recently revised US tax code and the expected tightening of monetary policy could reduce this growth to some extent, particularly from public issuers, we expect the US to remain one of the leading countries for green bond issuance in 2018," said Ms De La Gorce.

Emerging markets are also likely to maintain their involvement in the market, led by China, India and Mexico.

The contribution of those three countries to global labelled green bond issuance rose to 20 per cent in 2017 from 7 per cent in 2015. Last year's largest issuers included the Bank of Beijing (US$5 billion), the Indian energy company Greenko (US$1 billion), and Mexico City Airport (US$4 billion).

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