Green Bonds Market Summary: Q3 2017
Climate Bonds Initiative: Update

Q3 Headline Figures•••••

Issuance: USD27.7bn bringing the 2017 total to USD85.2bn1
Second largest quarter of issuance ever75 green bond deals from 65 issuers, with 52% being first-time issuers
Green Bond transactions accounted for approximately 2.7% of global bond market
transactions
Top 5 largest issuers of Q3: Mexico City Airport (USD4bn), Engie (USD1.5bn), EIB(USD1.4bn), Asian Development Bank (USD1.25bn), TD Bank and Greenko
equally placed (USD1bn each)

USD bnQ3 Growth Comparisons 2014-2017
30
25

Q1Q2Q3Q420
15105201420152016

2017

SummaryThe green bond market has kept its strong pace in Q3 2017. On September 28th, thetotal amount of green bonds issued in 2017 ytd (USD83.2bn) overtook last year’s total
issuance of USD81.6bn.
Emerging markets dominate top 5 country table
On the country table, the top sources of issuance were Mexico (USD4bn), China(USD3.9bn), France (USD3.3bn), U.S. (USD2.8bn) and India (USD1.9bn).

1 If our figures are a bit different to others, this is because our figures include: green bonds that meet CBI definitions

only. Climate Bonds Initiative regular reporting only includes green bonds (not ‘social’ or ‘sustainability’ bonds) that fit
inside our Taxonomy around what constitutes a green bond and where we’ve been able to find sufficient
documentation to make a reasonable assessment. Our figures may not be the largest, but they’re the greenest.

Mexico was a surprising addition to the number one spot, after issuing no green bonds
in Q1 or Q2 2017. Mexico City Airport Group issued USD4bn via two tranches inSeptember 2017.

USD bnQ3 country issuance: Emerging markets on the rise
4.5
4
3.5
3
2.5
2
1.5
1
0.5
04

3.9
3.3

2.8
1.9

Spotlight on Mexico
The domestic green bond market has been growing rapidly, supported by a wide rangeof stakeholders. In May, 57 Mexican institutional investors with USD214bn in AUM
made a bold public statement to back green bonds in the Mexico Green BondsInvestor Statement 2.
The Mexican Stock Exchange (Bolsa Mexicana de Valores - BMV) is also active in thegreen finance space, from their participation in a Climate Bonds Working Group to thecreation of the Climate Finance Council and their dedicated green bond segment. The
next step for Mexico is to diversify the issuer base – all USD4bn of Q3 issuance camefrom Mexico City Airport.

Spotlight on India
The Indian green bond market has been growing rapidly since the introduction of adraft Green Bond Guidelines by the Securities and Exchange Board of India (SEBI)
last year. While slightly smaller than from Mexico in Q3, issuance from India is morediverse with three separate issuers coming to market this third quarter (seven in 2017to date).
India is also becoming a leader in best practice with more than half of its green bonds(by value) obtaining the Climate Bonds Certification. There is also potential from IndianRailways and Mumbai Metro Rail Corporation Ltd. to issue debut green bonds.

2 https://www.climatebonds.net/2017/06/57-mexican-investors-usd-214bn-aum-back-green-bonds

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We hope to see this towards the end of the year, as well as talks about “blue bond”
issuance (bonds which proceeds will go towards water infrastructure projects) comingto fruition into 2018.
Indian regulators are also working to develop green finance. In addition to SEBI’s final
Green Bond Guidelines of May 2017, the Reserve Bank of India (RBI) has been
recently working on a green finance framework to streamline the process of raisinggreen debt. It also passed regulatory reforms looking to strengthen and expand theIndian corporate bond market. Key measures include the permission for banks to issue
masala bonds. The latter are already a growing theme in the green bond market.

Q1-Q3 2016/2017 green bond issuer comparison
100%

80%

13%

9%

2%

11%

20%

5%

Muni/Provincial/City

17%

Gov, agencies and state-backed entities

60%

Development Bank

30%
40%

20%

36%

Corporate
Commercial Bank

27%
15%

0%

Sovereign7%

6%

Q1-Q3 2016

Q1-Q3 2017ABS

New IssuancesFirsts from both Malaysia (Tadau Energy) and Lithuania (Lietuvos Energija) further
expanded the geographic diversity of the market. 24% of new issuers were from China
and 18% from the U.S.
The first Green Sukuk was issued by Tadau Energy (MYR250m - USD58.5m) at theend of July 2017. Another Malaysian solar company, Quantum Solar Park, followed inearly October with its inaugural MYR1bn (USD236m) green SRI issuance, which isalso the largest to date.
Sukuk are “tradable Islamic finance instruments”, consistent with the principles ofSharīʿah and represent an ownership in underlying assets or earnings from thoseassets.
While sukuk are often described as Islamic bonds, there are also types of sukuk thathave equity-type risk-sharing structures. Their closest equivalent is probably the“YieldCo”, with its fixed interest like return.
3These financial instruments are important within Islamic finance and we hope to see
the green part of this market flourish, supported by incentives including tax deduction
on issuance costs.

External reviews are increasing
Only 4 out of the 33 new green bond issuers this quarter did not have any external
review on their green bond framework (and 3 of the 4 were US municipalities). This ispart of an emerging trend for issuers to seek external verification, contributing to thedevelopment of a more robust and transparent green bond market, on top of
broadening investor base and increasing confidence on the greenness of the assets.
Repeat issuers are part of this trend - for example, Sumitomo Mitsui Banking Corp(SMBC) commissioned Sustainalytics to provide an opinion on their framework for theirsecond issue, while their inaugural deal did not have any external review.

Bonds pending or not included
USD7.5bn of labelled green bonds have not been included in our Q3 numbers. Theseare either because the proceeds will finance social or other wider projects or because
they fit into three broad categories:
1) Insufficient information available (<USD0.5bn) to assess whether or not they

are in line with the Climate Bonds Taxonomy. This includes some bonds whereproceeds are going to broad categories such as energy, but no further
information is available to assess whether controversial projects such as clean
coal or large hydro are included.
In some cases, issuers even had an external review but chose not to make itpublicly available (e.g. Meggle). These bonds are pending inclusion until further
information is available.

2) Use of proceeds is not in line with the Climate Bonds Taxonomy(USD2.7bn) usually because they include large-scale hydro or clean coalprojects. All these bonds were issued by Chinese entities.
Although hydro and clean coal are currently permissible under the People’s
Bank of China (PBoC) definition, we are expecting to see a stricter green bondcatalogue in line with international definitions in the near future.

3) Less than 100% of proceeds are allocated to green projects (USD2.4bn).

Bonds are excluded if less than 95% of proceeds are being used to financegreen projects. This covers bonds issued under the Chinese regulator ‘NDRC’4

whose Guidance allows issuers to use up to 50% of funds raised to repay bankloans or supplement their working capital.

Q3 Underwriters League Table
The league table shows Citi, HSBC and JP Morgan taking top spots.
The League table data is produced via a collaboration between Climate Bonds andThomson Reuters. Information on Thomson Reuters methodology and data is set out
at the conclusion of this report.

USD bnGreen Bond Underwriters League Table 2017 Q332.5US Muni deals (CBI data)

Sum without US Muni deals (TR data)

21.5
10.50Predictions for the remainder of 2017
At the time of publication (7th November 2017), total green bond issuance for 2017 wasaround USD95.7bn, edging towards the globally symbolic USD100bn mark which wehope will be reached during COP23.
But where will we land on the 31 st of December? We’re still optimistic for a late flourish
and a record $130bn for the year.
Watch this space; we’ll post the 2017 Annual Green Bonds Market Update nextquarter.

5OK, ok one last chart ☺

USD bnGreen Bond issuance by type 2013 - 12/10/2017
1009080706050

Sovereign
Other debt instrument
Muni/Provincial/City
Government agencies and state-backed entities
Development BankCorporate
Commercial BankABS

4030
20100201320142015

2016

2017

Note
League tables: Methodology 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 Reuters tables. 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, forinternational 18 months and above.
Transactions that mature or are callable/puttable less than 360 days after settlement areexcluded, for international 18 months and above.
Self-funded straight debt transactions are excluded (excluding mortgage and assetsecuritizations) unless two or more managers/ underwriters unrelated to the issuer arepresent. The unrelated firm in a self-funded transaction with only two book runners in thesyndicate 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 USD50m for core currencies are included, USD10m
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, arenot eligible for example, ESG bonds that combine both social and green projects.

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Disclaimer: The information contained in this communication does not constitute investment advice in any
form and the Climate Bonds Initiative is not an investment adviser. Any reference to a financial organisation
or debt instrument or investment 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 otherwiseof any debt instrument or investment product and no information within this communication should be taken
as such, nor should 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 adesignated debt instrument. It does not reflect the credit worthiness of the designated debt instrument, nor its
compliance with national 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 onbehalf of an individual or organisation, based in whole or in part on any information contained within this, or
any other Climate Bonds Initiative public communication

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