The green bond market has seen strong growth, with the market really starting to take off in 2014 when USD37bn was issued. In 2018 issuance reached USD167.3bn, setting yet another record.
The green bond market kicked off in 2007 with the AAA-rated issuance from multilateral institutions European Investment Bank (EIB) and World Bank. The wider bond market started to react after the first USD1bn green bond sold within an hour of issue by IFC in March 2013. The following November there was a turning point in the market as the first corporate green bond issued by Vasakronan, a Swedish property company. Large corporate issuers include SNCF, Berlin Hyp, Apple, Engie, ICBC, and Credit Agricole.
The green bond market has seen explosive growth in the past decade, presenting an unrivaled opportunity in climate finance. Annual issuance has now risen from zero to more than $155 billion globally, with more growth ahead. But in emerging markets, the green bond era is just beginning. Globally, most green bonds have come from developed nations. In emerging markets, most activity has so far has come from just two countries: China and India. Brazilian development bank BNDES raised $1 billion in one of the largest green-bond offerings from Latin America. Proceeds are being used to finance a wide range of wind and solar projects in Brazil.
Green bonds generate financing for projects in renewable energy, energy efficiency, sustainable housing, and other eco-friendly industries. They tap the vast pools of financing—the trillions of dollars held by institutional investors such as pension funds, insurance companies, and sovereign wealth funds—available in global capital markets. These investors are looking for climate-smart initiatives that make good business sense: opportunities that carry the right risk-reward profiles and meet investor-specific criteria for rating, tenor, yield, and geographic diversity.
Our goal is to make a call of paper for a special issue that compiles the latest trends in research related to green bonds and its implications on the growth of emerging economies. The aim is to provide the reader about the green bonds and its effects on the growth of emerging markets.
This special issue will focus on the various categories of green bonds.