A series of chunky issues have provided a welcome boost the green bond market in recent weeks.
The market, which has this year grown slower than many had hoped, enjoyed a turbo-charged October that has seen some $6 billion of issues so far.
The figures have been boosted by some big transactions from EDF ($1.25 billion), Development Bank of Japan (€300 million), KfW (€1.5 billion), Agricultural Bank of China ($995 million), and Sumitomo Mitsui Banking Corporation ($500 million).
Overall, according to figures compiled by Environmental Finance, some $33.9 billion of issues have closed so far this year, not far off the $36.6 billion figure for the whole of 2014.
A number of issues are currently in the pipeline, such as City of Paris and NRW – and most market watchers expect a surge of issues ahead of the Paris climate summit.
That means that the value of issues is likely set for another year of growth, albeit at nowhere near the pace as the trebling we have seen for the past two years in a row.
But, as Bloomberg New Energy Finance's Ethan Zindler pointed out at our Green Bonds Americas conference in New York, once you reach a certain size, rapid growth becomes harder to maintain.
Speakers at our New York conference were reluctant to make any predictions about how big the green bond market is likely to grow this year. That is because a year ago there were some overly optimistic predictions that issuance would hit $100 billion in 2015.
But one of the pioneers of the green bond market, SEB's Christopher Flensborg, was willing to stick his head above the parapet and make one bold prediction: he said that green bonds will account for 10% to 20% of overall bond issuance by 2020.
That is possible. To my mind, there are numerous reasons to be cheery about this juvenile market's prospects. Chief among these is that, whereas Europe has been its heartland in the past, the market is spreading into new geographies.
It was heartening to see the strong level of demand to attend our Green Bonds Americas conference, where we welcomed 170 delegates. Putting on a conference of this scale in New York simply would not have been possible two years ago. But there is now an increasingly receptive investor base in the US, and numerous companies eyeing the market as potential issuers.
Asia's enormous potential is just beginning to be realised. India has joined the party in recent months, after issues from ReNew Power, Yes Bank and CLP, and China will soon bring its economic might to bear.
A recent China green bond event held at the London Stock Exchange attracted more delegates than the venue could hold. China is due to publish a report on how it will 'green' its financial system in coming days, with green bonds expected to be a main pillar.
Other emerging markets also hold great potential for green bonds, although some will be tougher to crack than others.
We recently held a fascinating roundtable on the prospects for green bonds in Latin America – a market that has yet to take off.
In this case, delegates agreed that while the market could eventually be big, it faces numerous barriers in the near future, including building knowledge among potential investors and issuers. In fact, it may need some pump-priming from multilateral development banks if it is to really ignite.
The good news is that the Mexican development bank Nacional Financiera is currently roadshowing a green bond and the Inter-American Development Bank has plans for a securitised energy efficiency green bond. (Look out for our coverage of the round table in coming weeks.)
Overall, the case for green bonds remains robust because there remains a need for $1 trillion a year to be spent on clean infrastructure in the new world and the old world. Green bonds can play a key role in financing and refinancing this revolution.
