By Nina Chestney
LONDON (Reuters) – International inexperienced bond issuance reached a file excessive of $269.5 billion by the top of final 12 months and will attain $400-$450 billion this 12 months, a report by the Local weather Bonds Initiative (CBI) confirmed on Monday.
Inexperienced bonds are a rising class of fixed-income securities that increase capital for initiatives with environmental advantages, akin to renewable power or low-carbon transport.
Though issuance reached a brand new file in 2020, the determine was simply above 2019’s whole of $266.5 billion as issuance slowed within the second quarter because of the results of the coronavirus disaster earlier than rebounding within the third quarter.
“The affect of COVID-19 in 2020 proved an enormous financial and social damaging. In that context, the resilience of inexperienced finance markets led to a file 12 months of issuance,” the report mentioned.
“2021 might allow a sustained resurgence,” the CBI added.
The CBI is a London-based non-profit which promotes funding within the low-carbon financial system.
Supporting elements for inexperienced bond issuance this 12 months embody U.S. President Joe Biden’s intention to return the nation to the worldwide Paris Settlement to combat local weather change and traders and policymakers’ rising deal with decarbonising industrial sectors.
The inexperienced bond market began up in 2007.
Though they make up a small fraction of the general debt market, inexperienced bonds are attracting consideration as a result of the necessity to meet emissions-reduction targets will want trillions of {dollars} of capital from private and non-private sectors.
Final 12 months, the US issued probably the most inexperienced bonds, with a complete worth of $51.1 billion, adopted by Germany at $40.2 billion and France at $32.1 billion, the report mentioned.
The proceeds of inexperienced bonds had been primarily aimed toward power sector investments, adopted by low-carbon buildings and low-carbon transport, it added.
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