Borrowers from around the world are tapping Europe’s green-bond market, fanning a sales boom that has bucked this year’s wider debt-issuance slump.
Ireland, railway developer Societe du Grand Paris and auto lessor ALD SA are all planning debut deals, while Japanese lender Mitsubishi UFJ Financial Group Inc. is working on its second euro green note this year. Seven other issuers have already sold green notes this month including China General Nuclear Power Corp., French bank BPCE SA and Japan-based Sumitomo Mitsui Trust Bank Ltd.
Europe’s green-bond sales have surged almost 20 percent this year to 40 billion euros ($47 billion), fueled by issuers’ desire to tap the growing pool of money tied up in environmental-investment funds as well as a greater focus on sustainability. The green boom is a marked contrast to the 10 percent slowdown seen in the overall euro primary market as the European Central Bank pares stimulus measures, according to data compiled by Bloomberg.
“It is clearly a growing segment offering a more diversified investor base,” said Patrick Wuytens, head of high-grade syndicate at ING Groep NV.
Globally, green-bond sales have already exceeded $100 billion this year, the third time in a row the threshold has been breached, according to Bloomberg New Energy Finance. Assets under management at green funds in Europe have doubled since 2013, based on Novethic data. Governments, companies and institutions issue green bonds to fund projects that are supposed to help the environment or climate, though the exact definition is open to interpretation — leading some to criticize the nascent asset class.
Some potential issuers are waiting for the European Union to finalize green standards, which may happen by March, said Agustin Martin, an analyst at Banco Bilbao Vizcaya Argentaria SA. The new rules may streamline what can be time-consuming issuance, he said. The World Bank and European Investment Bank have backed a newly formed global green bond partnership to help boost issuance of non-sovereign green bonds.
In the meantime, Ireland may become the next European sovereign to sell green bonds, following Poland, France and Belgium. The government has announced plans for a roadshow and published its green-bond framework. The country could sell as much as 3 billion euros of green bonds before year-end, according to Commerzbank AG strategists Rainer Guntermann and Marco Stoeckle. Ireland’s National Treasury Management Agency couldn’t immediately comment on green-bond plans when asked by Bloomberg News.
Source Bloomberg