PROJECT | Staff Reporter, China

China to dominate global green bond growth

Demand for green bonds continue to outstrip supply.

China is at the centre of the green bond world and based on its climate change commitments and its ambitious renewable energy development agenda, we expect it to remain there for some time to come, according to BMI Research.

In 2016, China lead the way in the global green bond growth story and continues to provide the example of 'what good looks like'.

What is more, China's dominance comes at a time when issuance in the environmentally-friendly bond space is expanding out into new sectors; into to new corners of the globe, and lastly, into new structures (such as preferred stock and securitised transactions), as more capital is called for.

Here's more from BMI Research:

That is how the market is expanding, and here is the why: demand for such bonds significantly continues to outstrip supply, which leaves investors in a favourable position and strengthens the likelihood of activity in the market continuing to hit new record levels over the years ahead.

After all, such instruments are a win-win for both issuers and investors alike. For the former, there is plenty of liquidity with a large global institutional investor base - estimated by Moody's Investors Service as being at around the USD100trn mark in value - for them to tap.

Meanwhile for investors, putting money into green bonds means stability through strong ratings and liquid investments with long durations. With the proceeds of all deals committed to going toward climate-friendly initiatives there is, of course, the double benefit on the environment too, and powered by the 2015 Paris Climate Agreement, a pact which set out a global action plan - legally adopted by 195 countries - to put the world on track to avoid dangerous climate change by limiting global warming to well below 2°C, there is legal precedent for governments to encourage such issuance and investment too.

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