Green bond issuance forecast revised lower

ESG investingNordic bank SEB has revised its outlook for green bond issuance downwards after the market saw a flawed start to the year.

Christopher Flensborg, head of sustainable products and product development, fixed income and debt capital markets, at SEB, says his initial prediction that green bond issuance this year would reach $70 billion (€61.5 billion), was “probably a bit on the optimistic side”, and has revised the figure to $50-70 billion.

Green bond issuance almost doubled to $12.1 billion (€10.6 billion) in the second quarter (Q2) of the year – up from $7.3 billion in Q1.

Since the market started, the total cumulative issuance reached $78.3 billion in August this year.

Despite China’s recent economic woes, Flensberg remains optimistic about the country’s green bond programme. “There is no doubt about the ambitious intentions of China’s policy makers nor that the country will become … a key stakeholder in this market.”

However, he does say that good planning and research is required if China is to reach its potential as a green bond issuer. Policy recommendations include a special financial system of green banks and funds, in which green bonds are an integral part.

He believes these preparations should take around five years and will start at a local level.

“If further development then follows earlier patterns, it is likely that a few local governments/ municipalities or institutions will implement the system before a country wide implementation takes place.”

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