Global Green Bonds
Mid-Year Summary 2017
Climate Bonds Initiative

Headline figures for the Half Year (H1)

• 2017 issuance for H1: USD55.8bn
Records broken: Quarter 2 (Q2) is the largest quarter of issuance on record at almost• USD30bn• 82 green bond deals issued in Q2 from 74 issuers, with 50% of first timers• Green Bond transactions accounted for 3% of global bond market transactions in Q2
Top 5 largest issuers of H1: Republic of France (USD7.6bn), EIB (USD2.8bn), KfW• (USD2.5bn),
Bank of Beijing (USD2.2bn), TenneT (USD2.2bn)
Figure 1: Growth Comparisons 2014-2017 H13530

Q1Q2Q3Q4252015

USD Billions

1050201420152016

2017 H1So Far So Good
Nearly USD56bn in green bonds were issued in H1 with record issuance of almost
USD30bn in Q2:So far, USD19bn more have been issued in the first half of 2017 than for the corresponding
period last year! While this is encouraging, the current market growth is not quite on track
to reach the highest initial estimates for the year.
Climate Bonds current view is closer to USD130bn than our January estimate of
approximately USD 150bn. While Moody’s preliminary forecast was USD206bn (theyrevised this down in April), SEB in May projected between USD125-150bn and others
were wide ranging, from under USD100 to up to 150bn.

1The good news is that we’re optimistic the market will reach at least USD130bn, because
the second half of the year is always bigger than the first, China has a huge number ofbonds approved but not yet issued, several sovereign issuers are expected to come to themarket and, of course, demand is still strong.
Some scenarios for the rest of the year…

Figure 2: End 2017 Growth Projections:160
China issuance andcorporate issuancedoubles

140
Climate Bonds 2017 estimate

China issuance doubles

120

2017 H1 issuance >H2
with no uplift on China
2016 total

100

Linear growth to year end

USD Billions

80

Climate Bonds 2017
estimate

60
40
Q2

Q3

Q4

Headline figures for the Half Year
Issuance from China started slowly but is picking up. After a record-breaking 2017,
everyone had big expectations of Chinese issuance in 2017 with some estimates at
USD80bn. Q1 was slow with issuance amounting to less than USD1bn (less than 4% ofthe market) but is now picking up.
Q2 has seen China regain its top spot with over USD6.8bn issued (by comparison, Chinese
issuance in Q2 last year was lower at USD1bn). Accordingly China could be well positioned
again in the green bond market in 2017. Further, the domestic green bond market has seen
increasing signs of diversification with another green ABS issued.
Out of interest, why has Chinese issuance started slowly? The slowdown in Q1 waslargely due to tightened liquidity, domestic interest rate volatility and hence increase offunding cost. The market has rallied again so issuance could pick up even more in thesecond half of the year. We know of at least 30 issuers who have been given approval
to issue green bonds already and there will be others. More information on the Chinese
market is available here.
General corporate issuance is growing but only in some markets. There are a lot of
rumours that the corporate market is stagnant. Well, the good news is: this isn’t reallytrue. Issuance from non-financial corporates has almost doubled compared to this time
last year both in number of deals and in total amount issued.

Global Green Bonds Mid-Year Summary 2017 Climate Bonds Initiative2

Plus, of the 74 new issuers in Q1 and Q2, 22 of them were non-financial corporates –almost a third.
However, while corporate issuance is on the up, it’s not increasing everywhere. In somecountries, non-financial corporates make up a large proportion of issuance – e.g. theNetherlands (58% by value or 43% by number of deals) and Sweden (35% by value and69% by number of deal). In other countries, this is not the case – in the U.S. non-financial
corporates account for just 18% of the value of issuance or just 5% by number of deals.
As the just released BNEF Green Bonds 2016 report noted, there’s plenty of headroom.
External reviews are a rising trend, accounting for 74% in terms of number of deals in
Q2. This is up from an average of 70% of deals with reviews in 2016. The rising trend ofissuers seeking reviews is encouraging and is now evident across most markets.
Geographic base is expanding. Europe still makes up the majority of the market (48%),though issuance is broadening with first-time issuers from Argentina, Singapore, Slovenia
and Switzerland. Issuance from emerging markets is still quite small with Brazil taking thelead, but encouraging signs are still coming out of Africa.
Kenya and Nigeria both have working groups on green bonds with a sovereign green bondexpected out of Nigeria before the end of the year, Moroccan issuers continue to issue
small but important bonds for solar and South Africa’s City of Cape Town issued theirdebut green bond in early Q3.

Figure 3: Green Bonds issuance by volume 2017 YTD
Q1Q2

1210862AD
ANCAN

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BRITAL
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AUST
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ANRM

SWnal
GE

atiopran

AN
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Su

IN
A

HE
RL

CHNE
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ED

UN

IT

FR

ST
AT
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0AN
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USD Billions

4

Plenty of US municipalities are tapping the market. Issuance amounts to almost USD5bn
in 2017 in the first half of 2017 (total issuance in 2016 was USD7.1bn), meaning that USmuni issuance could reach USD10bn this year. US municipalities are the backbone of theUS market, accounting for 56% of US green bonds issued in H1 2017 by value and around
70% by number of bonds.

Global Green Bonds Mid-Year Summary 2017 Climate Bonds Initiative3

League tables for Q1 and Q2. Crédit Agricole is on top, followed by Morgan Stanley andCiti. Thanks again to Thomson Reuters for providing their Q1 and Q2 league table data tous. Please see Methodology Notes** about league tables at the end.

Figure 4: Green Bond Underwriters League Table Q1-Q2 2017Total excluding US munis (TR* data)

4.0

US munis (CBI data)

3.5
3.0
2.5
2.0
1.5

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ndesbaria
dustIn* Source: Thompson Reuters data

Chichnk

Sa

BaB
SE

anm
ld

BNl&GoCo
mrc
lays
P
Pa
ribas
BoSoAMcieteLGe
nerale
JP
Mor
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Na
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AgitCred

CitieorCIga
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USD Billions

1.0Predictions for the rest of 2017…
Sovereign issuance will increase – we have counted 8 different sovereigns that have madecommitments to issuing green bonds. We’re not sure they will all be issued in 2017, butwatch out for Nigeria, Kenya and Morocco.
Chinese issuance will pick up exceeding 2016 issuance. We know there have been a lotof deals approved for issuance by PBoC, so when the market conditions are right, moreissuance will come.
Harmonisation of standards looks increasingly likely. Many conversations have been
convened by the Green Bonds Principles and others to strengthen harmonisation between
standards, external reviews and Certification schemes.
Further the European High Level Expert Group on Sustainable Finance published its Interim
Report, which among other things calls for an EU wide approach to green standards andlabelling.

Global Green Bonds Mid-Year Summary 2017 Climate Bonds Initiative4

Guidance on impact reporting may be forthcoming. Post-issuance reporting in the green
bond market, the Climate Bonds study released in June, revealed that impact reporting ison the rise, but that there is little consistency and comparability.
Large development institutions have initiated some progress with the Harmonized
Framework for Impact Reporting in 2015 but our view is that this has become a hot topic
and we will see more detailed guidance for the corporate market.
USD130bn for the year looks possible – we expect issuance to increase over the rest ofthe year and possibly exceed the Climate Bonds estimate for 2017 of USD130bn. The bigquestions would be: is USD1trn a year by 2020 possible?

Traction on USD1 trillion by 2020
In an article for Nature, Christiana Figueres and colleagues have set out six milestones forturning the tide of the world’s carbon dioxide by 2020. Together, the six milestones reflect
the urgent need to accelerate action to address climate change.
Among the actions is call for a tenfold increase in green bond issuance. Milestone six
is USD1 trillion by 2020. That’s almost three and half years and four COP conferences(COPs 23-26) away.
So now’s the time for the global financial sector to get busy on their big 2020 contribution
to emissions reduction.

OK, one last chart…

Figure 5: Green Bond issuance by type 2013-2017

100Sovereign
Other debt instrument

USD Billions

80

Muni/Provincial/City

60

Govt agencies &state-backed entities

40Development Bank
Corporate

20

Commercial Bank0ABS201320142015

2016

2017 YTD

Coming Up Soon
Don’t miss our China Report out soon and our 2017 State of the Market launch later in
September.

Global Green Bonds Mid-Year Summary 2017 Climate Bonds Initiative5

Methodology Notes and Disclaimer**Methodology Notes League tables and data
Since Q3 2016, the Underwriters league tables are collated using data from Thomson Reuters except for US municipal
bonds which are calculated by the Climate Bonds Initiative. As such, ranking volumes differ from Thomson Reuterstables. Volumes may differ from other league tables as they include all ABS deals and US municipal bonds and exclude
bonds which have less than 100% of proceeds going to environmental assets/projects or aren’t within the Climate
Bonds taxonomy.

Note: Data includes
Primary Issuance only•
• Underwritten transactions only
• Thomson Reuters data excludes tax exempt muni bonds
The global table includes transactions that mature at least 360 days after settlement, for international 18 months• andabove.
Transactions that mature or are callable/puttable less than 360 days after settlement are excluded, for• international
18 months and above.
Self-funded straight debt transactions are excluded (excluding mortgage and asset securitizations) unless two or• moremanagers/ underwriters unrelated to the issuer are present. The unrelated firm in a self-funded transaction
with only two book runners in the syndicate will receive league table credit.
Transactions with an issue size of less than USD 1 million (equivalent) are included, sole led MTN take owns with a• minimum
size of USD 50m for core currencies are included, USD 10m for non-core.

• Deals must be received within five business days of pricing to be eligible.
For a transaction to be green league table eligible, deals must have 100% of proceeds formally earmarked for green• projects.
Issuances where there is a mixed use of proceeds designated across different projects, are not eligible for example,• ESG
bonds that combine both social and green projects.

Disclaimer: The information contained in this communication does not constitute investment advice in any form andthe Climate Bonds Initiative is not an investment adviser. Any reference to a financial organisation or debt instrument orinvestment product is for information purposes only. Links to external websites are for information purposes only. The
Climate Bonds Initiative accepts no responsibility for content on external websites.
The Climate Bonds Initiative is not endorsing, recommending or advising on the financial merits or otherwise of any
debt instrument or investment product and no information within this communication should be taken as such, norshould any information in this communication be relied upon in making any investment decision.
Certification under the Climate Bond Standard only reflects the climate attributes of the use of proceeds of a designateddebt instrument. It does not reflect the credit worthiness of the designated debt instrument, nor its compliance withnational or international laws.
A decision to invest in anything is solely yours. The Climate Bonds Initiative accepts no liability of any kind, for any
investment an individual or organisation makes, nor for any investment made by third parties on behalf of an individualor organisation, based in whole or in part on any information contained within this, or any other Climate Bonds Initiative
public communication.

© Climate Bonds Initiative 2017www.climatebonds.org

Global Green Bonds Mid-Year Summary 2017 Climate Bonds Initiative

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