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Market for green bonds poised to surpass $20bn – Climate Bonds Initiative

Current market volume stands at $19.67bn

The global market for green bonds is about to surpass the $20bn mark and could go to $23bn by the end of this month, according to the Climate Bonds Initiative, the NGO that promotes investment in and standards for the securities.

The initiative said today (June 12) that market volume stands at $19.67bn. This compares with $11bn for all of 2013. The market has been buoyed by issues from the likes of the European Investment Bank, French state-controlled utility Électricité de France and utilities firm GDF Suez.

Sean Kidney, the initiative’s founder and chief executive, cited a pipeline of issuance: “$20bn could be hit by next week and we could have as much as $23bn by the end of June,” Kidney told Responsible Investor, though he couldn’t reveal more about the upcoming deals.

According to Kidney, some of the factors driving the growth in green bonds were huge demand among investors for the securities and the trend among banks and corporate issuers to legitimately call some of their debt “green.”
Given such robust growth, Kidney expects the green bond market to be worth $100bn by the end of 2015 and as much as $300bn by 2018.“If, however, we get just one incidence of greenwashing in this market, the momentum will disappear just as fast as if you let the air out of a balloon. That’s why I’m fighting on the front lines to ensure the integrity of all green bonds issued.”

Elsewhere, Vornado Realty Trust, the New York-listed equity real estate investment trust, has priced a $450m public offering to fund ‘Eligible Green Projects’. Bank of America’s Merrill Lynch, Pierce, Fenner & Smith Inc., Deutsche Bank Securities, UBS Securities, Barclays Capital, RBS Securities and Wells Fargo Securities were joint book-runners. Merrill Lynch, Pierce, Fenner & Smith was the structuring agent.

It’s similar to that issued by real estate firm Regency Centers Corporation last month, which said proceeds would be used for the acquisition or development of energy efficient properties.
Meanwhile, Spanish bank BBVA has said it has signed up to the Green Bond Principles, a set of guidelines set up this year by a group of investment banks. “BBVA is aligning itself with the latest trend in the universe of capital markets,” said Julián Romero, Head of Bond Syndication-Europe.