Corporate and municipal sectors drive green bond explosion

Rapid growth in the green bond sector continued in 2014, with US$36.6 billion worth of bonds issued — more than triple the value of the 2013 issuance.

Data from the UK-based Climate Bonds Initiative revealed that new entrants including corporations and municipalities had joined the "green party", accounting for almost 50 per cent of all green bonds issued in 2014.

However, the development banks, including the European Investment Bank (US$5.6 billion) and the World Bank (US$3.1 billion), remained the biggest issuers of green bonds.

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The Climate Bonds Initiative report found that the surge in corporate bond issuances, which amounted to US$12 billion, was a major catalyst for the market explosion.

"Green corporate ‘earmarked' bonds helped create depth in the green market," the report said.

"Not only did the corporates bring scale, accounting for $12bn issuance, but they also offered a range of currencies - both great for liquidity in the market."

Toyota's US$I.75 billion green bond issuance was the first ‘green asset —backed bond', with proceeds earmarked for future green vehicles.

Retail and regional banks issued US$1.2 billion, led by France's Credit Agricole CIB, which used its green loan book to back US$478 million green retail bonds for Japanese investors over the year, which the report described as "an important step as banks play a crucial role in the capital pipeline" to support environmentally sustainable projects.

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