The corporate green bond market got off to an auspicious start in 2016 with Apple’s first ever green bond issuance on Feb. 16, worth $1.5 billion. The market predicted this issue by the world’s largest company by capitalization would open the gates to more large corporates tapping the market for green bonds, which are issued specifically to fund environmental projects.
We estimate the corporate sector will issue at least $15 billion in green bonds in 2016, which would represent a big leap from $9.6 billion in 2015. Our estimate is based on the actual first-quarter volume of $15.71 billion in the total sector–including sovereign, financial, and municipal issuance. It assumes that corporate bond issues continue to make up about 25% of the total deal flow, as was the case in 2015. It also corresponds with total outstanding issuance. If the Chinese corporate green bond market takes off this year, as some market observers predict, this could add around $13 billion to corporate green bond issuance in 2016, by our reckoning, bringing total corporate green bond volumes to $28 billion. However, this is subject to the release of the Chinese corporate green bond guidelines, expected this quarter.
